Teracent Acquisition Could Give Google Inside View of Yahoo, AOL

Google has acquired dynamic digital ad customization firm Teracent. The deal not only bolsters Google’s display ad capabilities; it could give it insider knowledge of some of its biggest competitors, Yahoo and AOL.

“This is a significant building block as we continue to build our display business,” said Neal Mohan, VP product management at Google. The company intends to pair Teracent’s technology with the DoubleClick platform as well as its content network for display advertisers. Terms of the deal were not disclosed.

Teracent, which competes with other dynamic ad firms like Tumri and Dapper, customizes ad creative and offers based on behavioral, contextual, demographic, geographic, and other advertiser data such as purchase history. Teracent enables dynamic ad creation and optimization for mobile and video ads, too.

In May, Yahoo announced partnerships with Teracent and Tumri to expand the capabilities of the Yahoo Smart Ads dynamic ad platform. Yahoo later extended its deal with Teracent to the mobile platform, giving advertisers similar dynamic ad capabilities on wireless devices.

It is unclear whether Yahoo will continue its relationship with Teracent if the Google acquisition is approved. Mohan declined to comment on the Yahoo partnership, and Yahoo has not responded to ClickZ’s inquiry regarding the future of its deal with Teracent.

Teracent’s partnerships with ad networks should remain intact if Mohan’s comments are any indication. The dynamic ad technology “will be used on the DoubleClick platform, and we imagine others,” he said. “The DoubleClick platform for advertisers specifically has had a long heritage of providing tools that work across publishers and networks.” The system will also be connected with Google’s own display ad network. There are no plans to apply the Teracent technology to dynamically optimized Google’s text-based ads, according to Mohan.

While Mohan stressed the acquisition is focused on traditional display, he added that Teracent’s system is “flexible and we believe the core capabilities can be used in a variety of different formats.”

Earlier this month, Google agreed to purchase mobile ad network AdMob for $750 million. Both of the recent acquisitions can be viewed as shots across the bow of Yahoo. The companies will now compete more directly in the dynamic and mobile ad arenas.

Google has also stepped up competition against Yahoo’s Right Media ad exchange by officially launching its DoubleClick ad exchange. Since then, Yahoo has announced it will clean up Right Media by removing several low-value brokers from its exchange.

Teracent SVP, Sales and Marketing Chip Hall helped create the Smart Ads product for retail advertisers while working at Yahoo. In addition to the glimpse into Yahoo’s inner-workings that Hall may provide, Google may also learn more about AOL through the Teracent acquisition. Teracent VP, Business Operations Nick Cherry worked with AOL-owned Advertising.com for almost eight years, according to the Teracent Web site.

“Regardless of their background, we really found the team there to be an exceptional team…in terms of the customer relationships, the technology, etc.,” said Mohan.

Mohan would not answer questions about where Teracent’s staff will be based if the acquisition goes through. The company is based in San Mateo, CA.