Two weeks ago it was AdMob, and today it’s Teracent, a three-year-old startup with technology that automatically customizes display ads depending on which geography they’re being shown in, when they’re being viewed and so on.
Teracent had raised nearly $7 million, according to Thomson Reuters — around $5 million of that in Series A funding from NEA back in March 2007. Neither NEA’s Krishna “Kittu” Kolluri nor Peter Sonsini, who are on Teracent’s board, was available for comment, and Google is not disclosing the terms of the acquisition or many details.
But one VC who’s invested in advertising startups — Bo Peabody of Village Ventures — told me recently that Google has been behind in display ads, partly because of the difference in how companies and VCs on the East and West Coasts view advertising. So is Google catching up there too?
Peabody is on the East Coast, where, he says, display advertising rules. One of his investments — Waterfront Media in New York, which merged with Steve Case’s Revolution Health Network last year and is trying to be the number one source on the Web for both information about healthcare and the sale of healthcare ads — wines and dines New York ad reps because that’s what you have to do to sell display ads.
“Selling ads to New York agencies isn’t practical — you have to throw $75,000 parties at the Grammercy to be successful…(but) nobody on the West Coast gets this,” Peabody said. “Waterfront Media sends school busses to the front door of every ad agency in New York and throws a party for (the 25-year-old ad reps). That’s the only way these kids can survive in New York. They party every night so they can eat – every nickel goes to rent.”
On the West Coast, he says, the small, self-service ads sold by Google and Facebook dominate, and display advertising has been seen as less important — “esoteric, New York City stuff.” He also argues that Yahoo’s attempts to compete with Google on search distracted Yahoo from what was really its more important business — display advertising.
Now, maybe, having surpassed Yahoo in search, Google will catch it in display ads too. Google continues to take steps to integrate DoubleClick, which it acquired last year after a months’ long investigation by the Federal Trade Commission about the possible impact of DoubleClick on Google competitors. One commentator, Scott Cleland, has asked whether Google’s AdMob acquisition also raises anti-trust concerns because of the potential for Google to dominate mobile ads, although others disagree.
Google said in a statement today that Teracent’s technology “has great potential to improve display advertising on the Web.”
