AOL Buys Ad Targeting Firm Tacoda

AOL said Tuesday it had entered into an agreement to acquire Tacoda, a company that specializes in offering behavioral targeted advertising.

Tacoda, which was founded in 2001, will operate as a wholly-owned subsidiary of AOL. It follows the Dulles, Va. based company's acquisition of ad serving company AdTech earlier this year.

Consolidation in the online ad business has been happening at a frenzied pace over the past several months. Google is trying to scoop up DoubleClick; Microsoft is planning to acquire aQuantive. Yahoo is also strengthening its position, buying the portion of Right Media that it did not already own.

At least two of those companies -- DoubleClick and aQuantive -- are expected to start incorporating aspects of behavioral targeting in the future. The industry is expected to become a $3.8 billion business within four years.

Behavioral targeting refers to a process where ads are displayed based on visitors' past online activities. Tacoda specialized in the process, and has since grown to one the largest of its kind here in the US.

"AOL is a perfect match for Tacoda," the company's CEO Curt Viebranz said in a statement. "By combining our targeting capabilities with AOL's existing set of solutions, we can better serve online advertisers and publishers as the market for behavioral targeting continues to emerge."

Tacoda is based in New York and employs about 100 people.