Yahoo is hoping to enhance its display ads to advertisers with the acquisition of online-ad technology firm Dapper. The Internet giant plans to complete the acquisition in the fourth quarter of 2010.

“Yahoo is already the largest and most successful force in display advertising, but the strategic addition of Dapper will enable our advertisers and agencies to quickly and easily build dynamic ad creative, leveraging data to automatically show the right product, offer, or message with each impression,” Yahoo posted on its blog.

Dapper was founded by Eran Shir (a theoretical physicist) and Jon Aizen (a Cornell graduate) in 2006, and has received $3 million in financing from Accel Partners among other venture capital firms.

In his blog, Shir wrote of the acquisition: “[Yahoo] is the big player that is most focused on the quality of ads. As creative agencies know, ads that run on Yahoo pass the strictest scrutiny. Yahoo pioneered the SmartAds program that gave a big push to this small yet pivotal market segment which deals with bringing science to the ad unit itself. As such, it has its mind and heart in the right place, and the synergy between our tech and Yahoo's scale can really make an impact on the web's ads.”

Dapper’s technology helps marketers build content rich and targeted ads by allowing users to set up their display ad preferences online and incorporate the most updated website information into display ads. The result: a positive web experience for consumers that also lets marketers get better performance from their display ads and publishers get deeper engagement from their users.

In a statement, Dev Patel, vice president of advertiser and publisher solutions at Yahoo, said: “Yahoo’s product strategy is focused on creating engaging and meaningful experiences that keep users entertained and informed. Utilization of consumer insights to deliver relevant consumer and advertiser experiences are built into our technology from inception and Dapper’s capabilities will further enhance the experiences we deliver.”