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Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

May 15, 2007 at 9:23 AM

AOL buys mobile advertising firm

AOL said today it has acquired Boston-based Third Screen Media, which has developed a mobile advertising network and mobile ad-serving platform. Financial terms of the deal were not disclosed.

Rumors have been circulating for some time that Third Screen Media would be picked up by one of the search giants. It was a natural target because it gained early acceptance in the wireless world fairly quickly.

Previously, I speculated whether AOL would combine Third Screen with Tegic, the AOL Seattle division that handles mobile. As it turns out, Third Screen will operate as a wholly owned subsidiary of AOL’s Advertising.com division.

“This acquisition brings together two pioneers in the interactive advertising space,” said Thomas Burgess, founder and chief executive officer of Third Screen Media. “Advertising.com has long been the advertising network to watch, and Third Screen Media broke new ground in the mobile advertising space with our pioneering technology and industry-leading mobile network. Together, we can now offer advertisers and publishers a comprehensive suite of interactive advertising solutions for every type of device, platform and program.”

One big complaint in mobile was that it is difficult for big advertisers to spend a lot of money in the area. Evem with deep pockets, they find it time consuming to approach each individual carrier in the U.S. to place small amounts of ad dollars.

As part of the Advertising.com business, could it become as easy as checking another box?

AOL said the acquisition comes as the mobile advertising industry is growing exponentially. Mobile advertising in the U.S. is expected to grow from $421 million in 2006 to $4.7 billion by 2011, while globally the market is expected to increase to $11.3 billion by the same year, according to eMarketer.

AOL acquired Bellevue-based Wildseed in August 2005, and merged it with Tegic’s Seattle office, which has become AOL’s mobile headquarters. AOL acquired Advertising.com in June 2004.

This acquisition follows one Microsoft made earlier this month in mobile advertising: ScreenTonic, a French company based in Paris. The purchase is expected to help Microsoft launch advertising on the mobile phone soon through its Windows Live properties.

With things apparently heating up in the space, I wonder if people are looking at purchasing other companies, namely Seattle-based Medio Systems, which does mobile search and advertising, or even Bellevue-based InfoSpace, which has a lot of experience in mobile but has struggled more recently.

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