Google announced they have purchased Teracent, a company that uses machine learning to show the different display ad creatives based on dozens of factors.

Google bought them to improve and better automate the display ad side of their ad serving technology. Google said:

We think that this technology has great potential to improve display advertising on the web. That’s why we’re pleased to announce today that we’ve entered into a definitive agreement to acquire Teracent. The transaction, which is subject to various closing conditions, is expected to close this quarter.

This can be used to better the DoubleClick software they acquired and other products and services they offer. Google added:

Teracent’s technology can pick and choose from literally thousands of creative elements of a display ad in real-time — tweaking images, products, messages or colors. These elements can be optimized depending on factors like geographic location, language, the content of the website, the time of day or the past performance of different ads.

This technology can help advertisers get better results from their display ad campaigns. In turn, this enables publishers to make more money from their ad space and delivers web users better ads and more ad-funded web content.

The Teracent web site has a little blurb on their site that reads:

We are excited to announce that Teracent has signed a definitive agreement to be acquired by Google. The infrastructure, opportunities and technical depth that Google will provide for Teracent customers means a future of product innovation for Teracent’s dynamic ad optimization platform. The transaction is subject to various closing conditions and is expected to close this quarter. Integration details will follow after close, and, in the meantime, please expect the same great Teracent performance and service as always. We are excited to finish this year on a high note for all our customers and partners and ring in an even more exciting 2010!

Postscript from Greg: This is important for several reasons; it puts Google on par with Yahoo in terms of its ability to deliver dynamic display advertising on the PC and do a range of targeting types, including behavioral targeting. It also offers some very interesting potential mobile applications. The “mantra” in the mobile and specifically the LBS world has been “right ad, right time, right place.” That’s not possible without this dynamic capability, which Yahoo has in mobile (in fact provided by Teracent, though perhaps not for much longer). It’s a bit like Google’s local extensions on the PC.

Think about the combination of this technology and AdMob and you start to see how Google will be able to deliver something pretty compelling in the mobile display arena — an ad platform that begins to truly leverage the additional capabilities and location-awareness of mobile devices and solves the “paradox of targeting and reach.”

Related Topics: Google: Acquisitions

About The Author: Barry Schwartz is Search Engine Land's News Editor and owns RustyBrick, a NY based web consulting firm. He also runs Search Engine Roundtable, a popular search blog on very advanced SEM topics. Barry's personal blog is named Cartoon Barry and he can be followed on Twitter here. For more background information on Barry, see his full bio over here. See more articles by Barry Schwartz