AOL has gone out and spent yet another reported $300 million on an online advertising property, continuing to pursue its transition from a paid online service to an entirely advertising based business, by taking on Quigo, which describes itself as a site and content targeted advertising firm. Its software offers contextual advertising which matches ads to the contents of a web page. Financial terms were not disclosed, but most coverage speculated on the same amount, around $300 million.
Already Quigo has 500 publisher relationships, including one it just signed with Time, and has a network of around 3,000 advertisers that use the service. The entire idea behind addressable advertising has been typified as one where a particular demographic of individuals can be reached, but increasingly it is easier to simply use the content they are viewing as the basis for advertising delivery. MySpace is in the middle of a rollout of a series of tools which allows advertisers to match words on the home page of MySpace users, with their adverts.
So the fact that Quigo’s AdSonar uses website terms, topics or keywords is very much in line with where addressable advertising is today. MySpace just reported that response levels are three times higher on this type of advertising, which in effect trebles the value of advertising inventory ‘ something that AOL will be keen to emulate rapidly with this acquisition.
Quigo offers text, display and video ads on either a cost-per-click or cost per impression, or cost per time basis. It also operates FeedPoint, a search engine marketing business that helps local and retail advertisers manage their marketing relationships with search engines and comparison shopping platforms.
Quigo is the fourth advertising company AOL has acquired this year after Third Screen Media, for mobile ads, Adtech, an ad serving mechanism which also offers web based automated client reporting just like DoubleClick, which AOL has been using for a serving ads in Europe and which is based in Frankfurt, Germany; and Tacoda, which keeps track of consumer browsing behavior. AOL is understood to be readying its advertising business under the title of Platform-A, which some expect to be separated from Time Warner in an IPO.
It’s a matter of opinion (and subsequent execution) whether you think it is just acquiring for the sake of it, and hoping a strategy will come together or if Quigo is, as the company says, the final piece of the jigsaw. Prior to 2007 AOL has also acquired Advertising.com, and Lightningcast.
Quigo employs just 100 people and will operate as a wholly owned subsidiary of AOL within the Platform-A organization.
‘With Quigo, we are putting the final pieces of Platform-A in place. We will be able to offer advertisers and publishers the most advanced set of tools, including contextual and behavioral targeting, superior analytics, and access to the largest display network in the marketplace.’ said Randy Falco, Chairman and Chief Executive Officer, AOL. ‘And by offering advertisers the ability to target ads based on the content of Web pages using Quigo’s AdSonar technology, we will be able to maximize the value of publishers’ ad inventory.’
So as of now AOL can provide page views through its own content based sites, but also provide advertising tools that serve multiple advertising types and formats (like 10 different video formats, etc’) as well as marrying this to browsers which have browsed related web sites in the past and those which are currently browsing sites with advertising related content on. That’s a pretty powerful set of tools for maximizing inventory, and we would expect it to begin to pay dividends over the next two to three quarters, if it is going to at all.