AOL buys ad firm Tacoda

Time Warner's AOL Internet unit has agreed to acquire Tacoda, a company that offers behavioral targeted ads.

Behavioral ads, which are relevant based on a person's online behavior, are the next phase of online advertising. A few weeks ago Yahoo launched SmartAds, which combines behavioral information with demographic information in ad serving.

Behavioral targeted ad spending is projected to nearly double next year to $1 billion and then nearly triple to $3.8 billion by 2011, according to research firm eMarketer.

Consolidation is ripe in the market. Google wants to buy online ad company DoubleClick for $3.1 billion; Yahoo recently spent $680 million for 80 percent of Right Media it didn't own; Microsoft is offering $6 billion to buy Aquantive; and WPP Group is acquiring 24/7 for nearly $650 million.

This is the latest ad-related purchase for AOL. The company acquired mobile advertising company Third Screen Media and AdTech AG, a Germany-based online ad-serving company this year. AOL purchased video ad firm Lightningcast last year and Advertising.com, the largest third-party display ad network, three years ago.

Tacoda, based in New York, will operate as a wholly owned subsidiary of AOL. Terms of the deal were not disclosed.