The Washington Post today confirmed AOL’s acquisition of Tacoda, an online advertising firm widely considered to be the leader of the behavioral targeted advertising market in the United States. Sources reported a price tag between $200 and $300 million.
For those who don’t know what behavioral advertising is, please see our glossary.
The acquisition of Tacoda marks AOL’s committment to entering the online advertising market, and is a natural continuation of the company’s earlier purchases. This past May, AOL picked up German-based ADTECH, an online ad-serving company that provides a platform from which publishers can launch campaigns. ADTECH and Tacoda round out a group of ad-solution based companies under AOL, including Lightningcast, Third Screen Media and Advertising.com. Certainly, the size of AOL’s latest acquisition deal is far smaller than its competitors’ more high profile purchases: Microsoft obtaining aQuantive for $6 billion, Google getting DoubleClick for $3.1 billion, and Yahoo! picking up RightMedia for $680 million. However, Tacoda was considered a prime acquisition for anyone looking to solidify their position in the market, with the company projecting a 300% increase in revenue from last year.
Still, there were some surprised observers to the deal. Henry Blodget at Silicon Valley Insider explains why:
“1) The reported purchase price seems low. Sure, Tacoda is a small private company, but given the price tags of the previous deals, combined with increasing scarcity value, one imagines that the number could have been significantly higher. This suggests that Tacoda’s revenue is smaller than its reach might suggest.
2) The buyer is AOL. No offense to AOL, but if Tacoda was really as hot a property as some buzz has suggested, one imagines that the buyer would have been Google, Microsoft, or Yahoo.”
Regardless, with Tacoda’s access to 125 million people across 4,000 sites and 31 audience segments and AOL’s online expertise and solid advertising acquisitions one can’t help but think that, far from closing its shutters, AOL is poised to make a splash in the online advertising market.