AOL Continues Online Ad Surge with Quigo Buy

Following days of speculation, AOL made its acquisition of contextual ad network Quigo official today. The deal continues AOL’s online ad buying spree, expanding the capabilities of its Platform A ad system, and boosting its position as a main contender for interactive ad dollars. The Time Warner firm also announced its Q3 2007 earnings today, showing AOL advertising revenues rose 13 percent over Q3 2006 to $61 million, not enough to counteract a 56 percent plummet in subscription revenues.

“In terms of competition, everybody’s trying to get the right set of tools to give advertisers the best reach across the Internet,” said AOL Spokesperson Anne Bentley. “We were looking for a piece that we don’t have to bring to the table, and that’s certainly what is the case with Quigo.”

Quigo, which primarily serves contextually-targeted cost-per-click text ads to over 500 publisher sites, has long been considered an underdog to Google’s ubiquitous AdSense program.

The acquisition is said to be worth around $340 million, and once approved will make Quigo a wholly-owned subsidiary of AOL. Quigo will become part of the company’s new Platform A unit, which houses other recently-acquired ad technology outfits such as mobile ad firm Third Screen Media, ad management company AdTech and behavioral targeting network Tacoda.

As Quigo and the others are integrated with AOL’s ad network, which also includes Lightningcast’s video technology, the company stands to have one of the most expansive and robust digital ad operations, competing head-on with Google and Yahoo, which is also setting its sights on leading the online ad network pack.

The first step in Quigo’s integration with AOL will be the extension of the AdSonar network into AOL-owned and operated sites, according to Quigo Chief Revenue Officer Henry Vogel. “We’ve been pushing to expand the AdSonar network,” he said. Vogel also expects AOL’s platform and that of its other recently-purchased subsidiaries to enhance Quigo’s analytics and ad optimization capabilities.

The small firm recently introduced display and video ad offerings and is enabling CPM- and time-based buys through its AdSonar system. Quigo also runs FeedPoint, an SEM business for local and retail advertisers. The company serves about 3,000 advertisers. and Time Warner’s Time signed exclusive ad relationships with Quigo this year. According to AOL, it is too early to know whether Quigo will continue serving its publisher clients in the same capacity as it does now once integration is complete.

Quigo has 100 employees; most are based in New York, while research and development staff is based in San Jose and Tel Aviv. AOL expects the acquisition to be approved by the end of this year.

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