Teracent's trademarked Intelligent Display Advertising makes ads fully customizable to specific consumers and sites. The technology relies on machine-learning algorithms to decipher and select the optimal creative elements for each ad impression.

"As you know, we've been busy releasing new features and products to help improve display advertising on the web for everyone. We believe that Teracent's technology fits neatly into these efforts," Neal Mohan, Google's vice president of product management, and Joerg Heilig, Google's engineering director, wrote on the company blog.

An Important Mobile Feature

Teracent's technology can pick and choose from thousands of display-ad creative elements in real time. Advertisers can change images, products, messages or colors. These variables can be optimized based on factors such as geographic location, language, the content of the web site, the time of day, or the past performance of different ads.

"This technology can help advertisers get better results from their display-ad campaigns," Mohan and Heilig said. "In turn, this enables publishers to make more money from their ad space and delivers web users better ads and more ad-funded web content."

Greg Sterling, principal analyst at Sterling Market Intelligence, agrees that Teracent's technology could bring Google users better display-advertising results -- and he noted it's an important capability in mobile advertising as well.

"The promise of mobile advertising is 'right time, right ad, right place.' In search, the user expresses that need or interest in the form of a query and you get an ad back that generally or directly satisfies that query," Sterling said. "So search is not as much of an issue as display advertising, which has historically been static."

Tying in AdMob

With mobile advertising, there are too many variables for human beings to manage. To fulfill the promise of right time, right ad, right place, a platform that mixes and matches creative elements and ad copy based on time of day and place is required, Sterling said. Teracent is that platform.

"Google has AdMob with all its publisher relationships and creative ad units, and now they've got a technology platform to allow some of those creative elements to be substituted based on these variables," Sterling said. "That's a pretty formidable combination."

Google snapped up AdMob for $750 million in stock earlier this month. Google said the AdMob deal will help the company develop more effective tools for creating, serving and analyzing emerging mobile-ad formats. As this ecosystem continues to grow, Google expects the new marketing media to offer significant benefits. Like Microsoft and Yahoo, Google is looking to tap into a mobile advertising market that's expected to grow to $5.7 billion by 2014.