NEW YORK (AdAge.com) -- Google today announced its acquisition of startup Invite Media for an undisclosed sum. The deal is a major endorsement for a nascent niche industry known as demand-side platforms, or DSPs, which allow advertisers to bid on display ad space across multiple ad exchanges, such as Yahoo's Right Media or Google's own AdX. Other companies that compete in this area include Turn, MediaMath, x+1 and DataXu.
"Display is prime time at Google, and it's an area we're investing heavily in," said Neal Mohan, Google's VP-product management. "This is the next step in that puzzle." Mr. Mohan pointed out that the move toward buying audiences vs. destinations is a rising trend among advertisers. "Google's vision is to grow that as much as possible," he said.
Though Google essentially invented ad bidding, the search behemoth took a somewhat unusual step in buying a technology it could have built on its own, and perhaps for far less. AllThingsD's Peter Kafka speculates Google paid $70 million or more for Invite, and while that may seem like a big price for a technology Google effectively already owns (via its keyword-bidding product), the true value proposition may not be in the startup's software code but its client list.
"That was not a factor at all," Mr. Mohan explained. "We were really impressed with their technology, and we were getting clear feedback from their customers."
Demand-side platforms effectively sit in front of any ad exchange, and given the ever-expanding sea of web pages to buy against, DSPs have become attractive to advertisers for their neutrality, a point Mr. Mohan said is an important factor to maintain post-acquisition. But that also means DSPs own a potentially deeper relationship to the advertiser, turning exchanges into a commodity.
Invite Media was founded by Nat Turner and Zach Weinberg as undergraduate students at the University of Pennsylvania in 2007. The company's investors include Comcast Interactive, First Round Capital and Gencast Ventures, and according to a BusinessWeek report the company was expected to draw in up to $10 million in revenue last year.