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6/13/2011
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Google Buys Admeld: But Will Publishers Swoon?

Publishers have long complained that Google steals their content and drives down ad prices. With Admeld, Google aims to charm, by solving ad management headaches.

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Underscoring its commitment to its growing online display advertising business, Google on Monday confirmed that it had acquired Admeld, a provider of advertising management services.

Admeld CEO Michael Barrett acknowledged the acquisition on Friday in a blog post. He said that both companies shared the belief that managing display advertising remains too complicated for publishers and that Google and Admeld together can make the ad management process more efficient.

The online display advertising business encompasses publishers that sell ad space directly to advertisers or agencies using a third-party ad serving company to record metrics and publishers that sell ad space indirectly, through ad networks that aggregate ad inventory.

Admeld is one of several companies that provides yield optimization data, to help publishers maximize the revenue potential of their ad inventory. It provides real-time analytics data about the publisher's audience and its appeal to advertisers.

"By combining Admeld's services, expertise and technology with Google's offerings, we're investing in what we hope will be an improved era of flexible ad management tools for major publishers," said Neal Mohan, VP of Google's display advertising business, in a blog post.

Display advertising has been a good investment for Google. Since acquiring DoubleClick three years ago, Google's display network has grown by a factor of five, and has been doubling annually in important markets like Brazil, Japan, and the U.K., Google SVP of advertising Susan Wojcicki said during an earnings conference call for investors in April.

Google is "focused on building an end-to-end platform to enable buying across the Internet for all advertisers and for all publishers," said Wojcicki at the time. "And we believe that if we do that and if we do that efficiently, that there will be a lot more dollars that will move over ... from off-line to online."

The global display advertising market is worth between $600 billion to $700 billion market globally, according to Google's SVP and chief business officer Nikesh Arora.

Adam Hanft, CEO of marketing firm Hanft Projects, said in a phone interview that while the reported $400 million price tag isn't a lot given Google's hoard of cash, the deal is significant nonetheless because it represents an olive branch to publishers, who have long complained that Google steals their content and drives down ad prices.

It remains to be seen how Google will utilize Admeld's technology to help its mobile advertising business. Hanft expects that a lot of real-time advertising inventory will be going to companies like Groupon and LivingSocial, and that Admeld could be quite useful there.

Hanft says it's too early to tell whether the advertising yield optimization business will really help publishers bring in more ad revenue. He notes that there's an inherent contradiction in Admeld's message that display advertising started out as a people-driven business and that the company's technology can help buyers and sellers return to cultivating personal relationships.

"You can't really have it both ways," he said.

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