AOL buys company to boost mobile ad business

AOL has acquired Third Screen Media to strengthen its position in mobile advertising, a small component of online advertising expected to shoot up in coming years and become a multibillion dollar market.

Third Screen Media, which has a mobile ad network and an ad management platform, will become a subsidiary of AOL's Advertising.com division, AOL announced Tuesday.

Like most major providers of online services, AOL is jockeying for position in the nascent mobile ad market, where spending is expected to double this year to $1.5 billion and grow to $11 billion by 2010, according to market researcher Informa Telecoms & Media.

Third Screen Media's network has "dozens" of brand advertisers, over 100 Web publishers and an undisclosed number of wireless carriers, AOL said. With its ad management platform, ads can be delivered via WAP, downloadable applications, SMS, MMS, and video.

For AOL, which is in the midst of a years-long transition from a subscription fee-based business to an advertising-focused business, it's critical to have a strong mobile ad network. Google, Yahoo, and other major consumer Internet players are also busy beefing up their ability to deliver services and advertising to cell phones.

As mobile devices overcome hardware limitations and bandwidth constraints, they are quickly becoming the preferred Internet-access vehicle for millions of people around the world. Consequently, marketers' interest in promoting their goods and services in mobile devices is quickly picking up.

AOL didn't disclose financial details of the acquisition of Third Screen Media, which is located in Boston.