AOL is Watching

AOL wants to enhance its online advertising business by partnering with Tacoda, a company that offers ads based on a person's online behaviour.

Tacoda was founded in New York in 2001. It caters to well-known publishing clients such as The New York Times, and has more than 4,000 websites in its ad network.

Tacoda's job is carried out in a series of steps. First, the online behaviour of Internet users is evaluated across a wide number of sites. This task is done in order to determine the active and passive interests of visitors. Next, the online audience is divided according to these interests. Finally, segments of users are sold to advertisers who promote products that appeal to specific customers. (Source: screendigest.com)

While this partnership may seem like a big step for AOL, it is merely following in the footsteps of other companies. For example, Yahoo launched SmartAds a few weeks ago. The program combines behavioural and demographic information in its approach to ad serving. Google is next in line with its recent purchase of online ad company, DoubleClick.

Why the sudden need to spend millions of dollars on advertising technology? "The U.S. online advertising market grew 35% in 2006 over 2005, the fourth straight year of expansion for this market, according to the Interactive Advertising Bureau." (Source: computerworld.com)

As for AOL, the company has gone on an uncontrollable ad-related spending spree over the past three years. It first acquired mobile-advertising firm Third Screen Media and AdTech AG, a Germany-based ad-serving company. AOL has also purchased unique ad companies Lightningcast and Advertising.com in the last few years.

We can only guess what will be next on the shopping list. (Source: news.zdnet.co.uk)