The search giant announced it is paying an undisclosed amount for Teracent, a California startup that specializes in creating customized display ads in real-time based on machine-learning algorithms. To illustrate the technology's potential, Google compared a traditional Google AdSense-generated advertisement, to a heavily tweaked and optimized ad as generated in real-time by Teracentís complex algorithms -- as shown below.
While regular display ads always look the same for every user, Teracent's ads (on the right) are automatically created from multiple creative elements and can change according to factors like geographic location and language, as well as the content of the website, time of day, and the past performance of different ads.
The technology can help advertisers get better results from their display ad campaigns, according to Google, while in turn enabling publishers to make more money from their ad space. The move might also come as a blow to Yahoo, which is currently working with Teracent to deliver SmartAds on its mobile properties. It will be interesting to see if Google will continue this partnership should the acquisition go through.