AdMeld could bloom Google's display arsenal

Display advertising to be a $200 billion industry, says Google VP of display advertising Neal Mohan

Well, it's late Friday here on the west coast, and neither party involved has yet confimed reports that Google has bought AdMeld for $400 million.

Assuming the deal is in its final stages, though, there will be lots of questions about the acquisition once it finally closes. Most importantly, what does this mean for online advertising?

To shed more light on the potential deal, I reached out to Myles Younger, co-founder and head of marketing and business development at a company based out of San Francisco called Canned Banners. The startup lowers the barrier of entry to display advertising by enabling anyone--ad networks, sales teams, bloggers--to create banner ads in a matter of minutes.

He got back to me with some thoughts I found insightful enough to want to share here:

"The AdMeld acquisition looks to me like more vertical integration on Google's part," said Younger. "In light of the fact that 'hockey stick' revenue growth from classic search advertising is over, Google sees display advertising as a major driver of future ad revenue and earnings growth."

There's little to argue with there. Look no further than news from... yesterday morning. Google VP of display advertising Neal Mohan argues that display advertising will grow to become a $200 billion industry by 2015. The reason, Mohan says, is that, while impressions might decrease by 25 percent, engagement across the board will rise about 50 percent. And when it comes to advertising, engagement is everything.

Additionally, as Younger pointed out to me, Mohan has suggested that $0.28 of every dollar spent on display advertising gets "lost in the friction." It's a giant problem, one which Younger's Canned Banners aims to partly solve and one which Google could be hoping to tackle in a major way with the acquisition of AdMeld.

Here are the most important advertising services and outlets owned by Google:

• AdWords, self-serve ad buying platform, launched by Google in 2000.
• AdSense, ad serving application, acquired by Google for $102 million in 2003.
• DoubleClick, ad serving platform, founded in 1996 and bought by Google for $3.1 billion in 2008.
• AdMob, mobile advertising platform, acquired by Google for $750 million in 2009.
• Teracent, creative optimization, bought by Google for undisclosed price in 2009.
• Invite Media, ad exchange, acquired by DoubleClick for $81 million in 2010.
• AdMeld, ad selling platform and yield maximizer, acquired by Google for $400 million in 2011?

"Once you put all those together (plus more to come, I'm sure)," says Younger, "you've got something truly unique that could finally 'democratize' display advertising and open the floodgates for millions of smaller advertisers who are sick and tired of being stuck with boring text ads or little thumbnail ads on Facebook."

More and more, it looks like Google has no choice but to buy AdMeld. Unless, that is, the company wants to just recreate AdMeld's features from inside the company. But that would inevitably raise a lawsuit stink, and no one wants to deal with that.

In the meantime, we await confirmation of the deal.

To learn more about self-serve advertising and the industry as a whole, check out this column by Younger on Adotas.com.