Google to boost display ad business with more acquisitions

Although Google reaches more users worldwide than any other website, Facebook has edged past the search giant in the online display ad business within the United States.

The social media site is expected to earn more than US$2 billion in ads this year, giving it a share of almost 20 percent of the U.S. market, Mobiledia reported. Facebook is also seeing its global ad revenue grow - reaching more than $4 billion in 2010, according to eMarketer.

But Google isn't going to let Facebook lead the market - at least not without a fight.

Google Executive Chairman Eric Schmidt told reporters at the Cannes Lions advertising festival last week that the display ad business has taken time to develop, and the company to continue buying up companies that specialise in display ads, Reuters reported. However, Google will look to publishers and advertisers to better understand which new services are needed.

"As the strategy develops it will become clear what the customer needs that we have not been able to build ourselves," he said, according to Reuters. "I would argue that we're doing really well there. We started off with largely text ads, and now we have this display business which is going to end up being a $10 billion, $20 billion kind of business. It will be very large."

Google is also not giving up on social networking.

The company plans to "renew its efforts on social networking, and could even link employees' salaries to the success of this yet unnamed venture. Having a social network may be a way for the company to compete with Facebook and create revenue through display ads scattered throughout the service," the Mobiledia article stated, attributing the information to comments made by Google CEO Larry Page in April.

Yahoo! is also focusing on display advertising, planning to increase its display ads in the U.S. by 13.6 percent this year,  a separate report by Reuters noted.

Earlier this month, the search engine giant purchased AdMeld, an advertising service that allows publishers to display real-time, interactive ads by sorting through various ad networks to find the cheapest possible option. The deal is estimated at $400 million. 

Admeld is expected to become part of Google's display ad network DoubleClick Ad Exchange, DailyFinance.com reported. Google's display advertising revenues from many of its online holdings, including AdSense, YouTube, Gmail, Orkut, and more.

Last autumn, Google expected to bring in $2.5 billion in ad revenue from display ads. It has also invested more than $4 billion in buying up display companies since 2007, most of which was the $3.2 billion for DoubleClick, according to a blog post by the Wall Street Journal. 

Google display-advertising chief Neal Mohan said the company “needs to be the platform that generates the most revenue for publishers, and to be transparent."