Google has agreed to purchase online advertising firm DoubleClick for $3.1b in cash.

DoubleClick is best known for its software that allows website publishers and advertisers to manage banner ads, an area in which Google has been lacking. The company has been owned by a pair of private equity firms since 2005.

Google hopes that the purchase will allow the company to extend beyond its text based AdWords and AdSense network programs into the more visible and lucrative banner ad market. Last year, Google drew more than 99 per cent of its $10.6b revenue from advertising.

Although text based advertising has provided an effective tool to reach niche audiences, banner advertising still has a purpose for campaign that need to appeal to a broad audience and provides a way to establish an online image.

The DoubleClick acquisition is the culmination of a reported bidding war between Google, Microsoft, Yahoo and AOL over recent weeks.

Google plans to inject its own technology into DoubleClick's practices. The company said that it aims to match the banner ads to the content on the page, similar to AdWords.

"It has been our vision to make the internet better; less intrusive, more effective, and more usefull," said Google co-founder and president of technology Sergey Brin.

"Together with DoubleClick, Google will make the internet more efficient for end users, advertisers, and publishers." 

The acquisition is Google's largest to date, dwarfing the $1.65b in stock that Google paid for YouTube last fall. Google expects to finalize the Doubleclick acquisition by the end of the year.