Google Grabs Invite Media for Automated Display Ad Buys

Google's added another weapon to its arsenal of online ad services. The search giant has announced the acquisition of a startup, Invite Media, one of a small group of companies that gives ad agencies and advertisers the ability to do real-time bidding for display ad space.

Google's (NASDAQ: GOOG) billions of dollars in revenue has traditionally been driven by the text ad business powered by its powerful search engine. The company trails Yahoo, Microsoft and AOL when it comes display advertising, the richer ad formats that include graphics, images and video content, though Google's been making gains on the display side of late, specifically in display advertising for YouTube sites.

Invite Media's technology automates what is typically a labor-intensive process for advertisers: ad campaign management and deciding where to place ads. IDC analyst Karsten Weide said that Invite Media gives Google access to one of the new demand-side platforms (DSP) that shows great promise.

"Most media planning today is still manual," Weide told InternetNews.com. "There are rate cards to evaluate and, usually, a junior person with an Excel spreadsheet has to go through and figure out the best places to run ads."

Conversely, though there are still some manual steps needed, Weide said DSPs let you simply enter what audience you want to reach and your budget. "The platform goes out and algorithmically determines where you can get the most inventory for the least amount of money," he said.

While advertisers love the idea, Weide said DSPs are "an emerging threat to ad agencies" because the agencies services business goes away.

For now, Weide said most of the DSP providers are small companies handling only a small fraction of the online ad business.

"For those who are involved in display advertising, you’ll know that there's a lot of momentum and buzz in this particular area," Neal Mohan, vice president of product management, said in Google's DoubleClick Advertiser blog announcing the acquisition.

"In recent months, many agencies and advertisers have been asking us to make a bidding platform available directly to them, as they want to take advantage of the opportunities that real-time bidding presents. We're going to continue to invest significantly in improving Invite Media's technology and products as a separate platform and, in time, make it work seamlessly with our DoubleClick for Advertisers (DFA) ad serving product," he added.

Mohan also said Invite Media's platform would continue to be available to any ad agency or advertiser whether or not they use DFA.

Weide thinks Google's move could lead to other DSP acquisitions soon. "For Google, it's quite fascinating and fits with its overall scheme of automating whatever it can," he said.

Automation Versus the Human Touch

As for the ad agencies, Weide said they are making a major push into digital technologies to try and stay ahead with what they call "trading desks" that offer advertisers aggregated networks for ad placement.

For many campaigns though, Weide said the human touch will still be required, and that's good news for online display leader Yahoo.

For a big branding campaign like a new car, you still need the creative planning and other elements; those don't go away," he said. "And that's a strength Yahoo has over Google because Yahoo has people sitting there engaged with the agencies. Google doesn't seem to want to be in that kind of a business so that's going to exclude them from certain ad budgets."

Weide also said the latest industry estimates are that Google's YouTube, though once an also-ran in the display ad business, is now generating over a billion dollars in display advertising and may, for the first time, be approaching profitability.

David Needle is the West Coast bureau chief at InternetNews.com, the news service of Internet.com, the network for technology professionals.