Teracent Acquisition Validates Dynamic Display

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google_recruiting_small.jpgADOTAS – While Black Friday in-store sales have been dragging for the last few years, comScore points out that online sales jumped by 11% this last Friday over the year before, hitting $595 million. comScore predicts Cyber Monday (today) online sales could top $900 million. Every year the threat of online retail to actual stores transforms more into a reality.

The Tuesday before Black Friday Google introduced several upgrades to its product search functions, including higher-resolution photo galleries and review summaries. On Monday, the Internet behemoth announced the acquisition of Teracent, a company whose technology allows for real-time customization of display ads based on information gathered about a specific user.

The implications of these two together makes Google the definitive stop for product searching and the company’s DoubleClick ad exchange platform — which will feature Teracent’s technology — too attractive to ignore. Beyond retail, however, the Teracent acquisition has ramifications for display advertising and ad exchanges and networks.

In particular, says Paul Knegten, head of marketing for Teracent competitor Dapper, signals the necessity of dynamic ad functionality for display platforms: “from networks to algorithm-driven demand platforms and everything in between.”

Further consolidation will follow shortly. “[T]he majors will be looking to partner or buy to fill out their offering,” he added.

The Teracent acquisition appears to be the latest development in a new wave of consolidation, noted Calvin Lui, president and CEO of Tumri, another Teracent rival. He cited Google’s earlier acquisition of AdMob and Adobe buying Omniture. The last major consolidation occurred in 2007, he said, and included the acquisitions of DoubleClick by Google and Right Media by Yahoo!

“As consolidation occurs, key questions that will face the industry overall include the balance of power across players, depth and breadth of solutions offered, conflicts of interest for entities that both sell inventory as well as platform solutions, data usage and privacy,” he said

However, Google’s absorption of Teracent is likely to benefit non-affiliated dynamic ad companies like Dapper and Tumri as demand swells from display platforms clawing to keep up with Google.

Overall, though, the acquisition appears to be a positive development for the rapidly evolving display segment.

“Google is stepping up its display ad efforts across the board. It is interesting that they see dynamic creative (bringing performance back to display) as a key component to assure a full service for all advertisers,” Knegten said. “Performance-driven display advertising demands granular targeting of many different messages, and dynamic ads provide the tools to deliver it.”

Lui agreed: “What we are seeing and hearing from all players in the ecosystem … is that dynamic creative is absolutely part of this new wave of innovation, and will be a critical ingredient of the future of online advertising. Google’s entry into this space only underscores this statement.”

As display becomes increasingly attractive with dynamic ads and consumers skip the mall for the comfort of a browser,  Google’s Teracent acquisition appears to have changed the playing field and upped the potential of the display world.

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