Google (NASDAQ:GOOG) is in the process of purchasing AdMeld, which sells display advertising for large Websites owned by Thomson Reuters and Discovery Communications, and News Corp.'s Fox News and New York Post sites.
Google declined to confirm the buy, which TechCrunch first reported and claimed was worth $400 million.
Google has more or less locked up the market for search ads, where it has 90 percent-plus of text-based ads paired with search results. However, the company's plot of display ads-graphical ads with glimmer and sparkle that sometimes irk users-is much less.
IDC said Google's U.S. display ad revenue share grew to 14.7 percent in the first quarter of 2011 from 13.3 percent from the fourth quarter of 2010, passing Yahoo for the first time.
Neal Mohan, Google's vice president of display advertising, said engagement rates across all display ads will increase by 50 percent as "ads become less cluttered, more relevant, more engaging and more attractive."
Adding AdMeld would help Google grab ad inventory from leading online content publishers for its DoubleClick Ad Exchange marketplace, providing quite a weapon for Google in its battle against Yahoo, Microsoft, Facebook and other rivals.
However, such a deal would surely attract the attention of the Federal Trade Commission and the Justice Department, which have scrutinized Google recently for its large acquisition bids.
The FTC in particular has focused on Google's online ad mergers. The agency investigated Google's $3.1 billion bid for DoubleClick before blessing it in 2007. The FTC also delayed Google's $750 million purchase of mobile ad player AdMob before giving it the green light in May 2010.
At $400 million, AdMob is considerably smaller than those acquisitions. However, given Google's dominant position in online ads, a regulatory investigation to ensure the deal is in keeping with fair competition laws is virtually guaranteed.
If the AdMeld deal goes through, it would mark the continuation of an acquisition spree that cranked up in 2010, when Google spent nearly $2 billion to buy more than 40 companies.