AOL To Buy Online Ad Co. For $435M
Internet giant America Online Inc. is making its first major acquisition in several years, buying Advertising.com Inc. for $435 million in cash, the companies announced Thursday.
AOL chairman and chief executive Jonathan Miller said the deal reflects AOL's confidence in the once-shaky online advertising business as well as the confidence of corporate parent Time Warner Inc. in its AOL division.
"Online advertising is back," Miller said in a conference call with reporters. "The acquisition of this already profitable business will extend our reach."
The companies said the combination would provide advertisers with an opportunity to reach more than 140 million Internet users.
Advertising.com specializes in the "pay-for-performance" segment of the online advertising industry. Advertisers pay only for each customer that advertising.com can deliver, either through an online registration or directing a web surfer to an advertiser's site.
Advertising.com chief executive Scott Ferber said the company has unique technology that allows it to closely monitor advertising performance and successfully link advertisers to the right customers.
AOL vice chairman Ted Leonsis said the deal will not affect AOL's privacy policy and that customers' personal information will remain protected.
The announcement came a day after prosecutors accused an America Online employee with stealing a list of screen names that was eventually used to send massive amounts of junk e-mail to millions of AOL customers. AOL said it regretted that incident and was reviewing its internal procedures.
AOL, based in Dulles, has about 32 million customers worldwide.
Miller said the deal underscores his company's "determination to strengthen its competitive position" in a growing online ad market. After several years of general decline, Miller said AOL has posted two consecutive quarters of revenue growth from online advertising for the first time since 2000.
Baltimore-based Advertising.com said in a statement it works with more than 800 advertisers and over 1,500 online publishers on delivering and measuring the results of online marketing campaigns.
It increased revenue by 80 percent to $132 million in 2003, employs more than 300 people and operates principally in the United States, with operations in the United Kingdom, France, Germany, Norway, Sweden and Denmark.
Plans call for it to remain in Baltimore and it will be managed as a separate company within the AOL Media Networks business.
The deal is subject to regulatory approval but is expected to close in late summer.
By Matthew Barakat