For Google’s rivals, one the hardest things to compete with over the years has been its relentless drive to bring continual improvements to the effectiveness of its search advertising.
Every quarter comes a stream of improvements designed to boost the monetisation of search results, increasing the click-through rate and ROI for advertisers – and Google’s own profits.
It is now on the same relentless path in a new market: display advertising. Today’s news that it has bought Teracent, a private company whose technology is used to customise and target display ads, is a warning to Yahoo that the pace of innovation is picking up.
Most ad targeting on the internet tries to select the best advert to send to a particular user after making an estimate of things like his or her tastes, age and location. Teracent goes one better, designing what it thinks will be the best version of an ad to send to each user.
Advertisers who use the service basically hand over a collection of advertising elements to Teracent, which then combines and recombines them on the fly to reach what it believes will be the optimum result. Its algorithms rely on machine learning: the more versions of an advert that are shown, the better it understands which will work best in each set of circumstances.
The resulting adverts can look a little uninspiring (the images at the top and on the left illustrate how a home-improvement store’s ads might be recast for different users) but they make a point. When Google enters a market like display, it isn’t about to sit back and play by the old rules of the game.
