Google, bidding to boost revenue from display advertising, announced the acquisition on Monday of Admeld, a New York-based company that provides an advertising platform for publishers.
Financial terms of the transaction were not disclosed but technology blog TechCrunch reported last week that the purchase price was around $400 million.
"We often hear from major website publishers that ad management today is still mind-numbingly complicated and inefficient," Google's vice president of display advertising Neal Mohan said in a blog post.
"We've been investing in our publisher tools to try and improve this landscape and have made great progress, but we think we can do even better," Mohan said. "To help major publishers get the most out of the rapidly changing and growing display ad landscape, we've signed an agreement to acquire Admeld."
Mohan said Admeld has "quickly developed a great service that is helping many major publishers manage their ad space more efficiently and profitably."
"Together with Admeld, we hope to make display advertising simpler, more efficient and more valuable, provide improved support and services, and enable publishers to make more informed decisions across all their ad space."
The Mountain View, California-based Google makes most of its money from advertising tied to Internet search but is seeking to carve out a bigger slice of the growing display advertising pie.
The Interactive Advertising Bureau and PricewaterhouseCoopers reported in April that US online advertising revenue rose 15 per cent last year to a record $26 billion with display ads accounting for 38 per cent of the total.
Display advertising includes rich media, digital video and banner ads.
Founded in 2007, Admeld describes its mission on its website as providing publishers with "the cutting edge of advertising technology, enabling them to maximize their revenue and sell their inventory smarter and safer."
Besides its headquarters in New York, the company also has offices in San Francisco, London, Berlin and Toronto.
Admeld's 500 customers around the world include FOX News, Hearst Television, Discovery and The Weather Channel.
Admeld chief executive Michael Barrett said in a blog post that the acquisition of the company by Google would be subject to regulatory review.