- The Washington Times - Wednesday, July 25, 2007

NEW YORK (AP) — AOL said yesterday it was buying a company that delivers targeted ads based on a visitor’s browsing habits, continuing its bid to rely more on advertising as Internet access subscriptions plummet.

AOL, the online unit of Time Warner Inc., said the acquisition of Tacoda Inc. would help advertisers run more relevant pitches. Visitors who read a lot on new car models, for instance, might suddenly find automotive ads follow them to Web pages on baseball.

“The acquisition of Tacoda will build on our advertising momentum, letting us better serve advertisers by enhancing our ability to precisely target advertisements across an even broader network,” said Ron Grant, AOL’s president and chief operating officer.

AOL, with headquarters in Sterling, Va., plans to run New York-based Tacoda as a wholly owned subsidiary. The deal, whose financial terms were not released, was signed Monday and is expected to close by year’s end.

Tacoda uses data files called cookies to track the topics of interest to a specific visitor, be it a sport, a make of car or a geographic location.

The company says personally identifiable data such as e-mail addresses are not kept. Visitors can turn off targeting, but they must actively opt out by going to the Network Advertising Initiative’s Web site at networkadvertising.org.

Once the Internet’s powerhouse, AOL has seen Internet access subscriptions decline to 12 million in the United States, less than half its peak of 26.7 million in September 2002.

A year ago, it accelerated its bid to capture advertising revenues by giving away AOL.com e-mail accounts, software and other features once reserved for paying subscribers. The idea is to lure more visitors to AOL’s free, ad-supported Web sites as the online advertising market booms.

Overall AOL revenues have been declining, but the advertising portion has been growing. Ads made up 38 percent of AOL’s revenues in the first quarter, compared with 20 percent a year earlier.

Still, AOL trails its main rivals, Google Inc. and Yahoo Inc., in advertising dollars.