No price was disclosed.
Google dominates online search advertising and has been open about its desire to grow its share of the display advertising market. The company sees Teracent's technology as a way to help its advertisers run more effective display advertising campaigns.
"Teracent's technology can pick and choose from literally thousands of creative elements of a display ad in real-time -- tweaking images, products, messages or colors," said Neal Mohan, Google VP of product management, and Google engineering Director Joerg Heilig in a blog post. "These elements can be optimized depending on factors like geographic location, language, the content of the Web site, the time of day or the past performance of different ads."
During Google's October earnings call, CEO Eric Schmidt said that his company was looking to accelerate its acquisition rate.
In November alone, Google has announced the purchase of three companies: Teracent, Gizmo5, and AdMob.
"Google was not just talking when they said they were going to step up their acquisition efforts," observed Gartner Research VP Andrew Frank.
Frank says the deal "leverages some of Google's strength by enabling advertisers to run adapative ads that can configure themselves on the fly."
Automation won't put advertising design companies out of business, though Frank believes it may expand the range of self-service advertising available to small businesses.
However, he also argues that automation it will force designers to think differently about ad design and that it may even increase their workload.
Teracent's technology, he said, may lead agencies to create 10 or 100 versions of a given ad, to allow Google to deliver the optimal combination of elements.
Google's fondness for data-driven design led Douglas Bowman, the company's visual design leader, to resign in March.
Nonetheless, many designers see value in data.
Henrik Olsen, executive creative director at Hot Studio, a design firm with offices in New York and San Francisco, says the quantitative approach to visual design is the norm these days, noting that his company relies on user research. "The days of the rock-star designer, where Paul Rand would come in and show one design, are just gone," he said. "The modular approach is now being extended further into advertising."
Olsen sees the low-click through rates for banner ads as a sign that advertising has to adapt. "Advertising on the Web is not going away, it's just getting smarter," he said.
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