AOL Buys Tacoda for $275 Million

In a move that suggests that Time Warner is not, in fact, “mulling” an AOL sale, AOL will buy behavioural-targeting firm Tacoda (first reported by Peter Lauria of the Post).  The deal is now official.  A source familiar with the terms says that Reuters’ reported estimate of $275 million is accurate.   

One of the leaders in behavioural ad targeting, the New York-based Tacoda employs 100 people and serves ads to 125 million people across 4,000 Web sites.  It will operate as a separate subsidiary of AOL.  The Tacoda buy is the latest in an online ad-buying frenzy (Google for DoubleClick for $3.1 billion, Microsoft for aQuantive or $6B, Yahoo! for Right Media for $680 million, WPP Group for 24/7 Real Media for $649 million).

UPDATE: Our first reaction to the news is below.  We have since received additional information.  Please see AOL-Tacoda: The Inside Story above.

Today’s announcement is surprising for two reasons:

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 offence 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. 

In any case, another big win for Union Square Ventures, Tacoda, and AOL.

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