September 27, 2007, 12:00 AM

Big Internet players stake their claims in the online advertising gold rush

As advertising market trends continue to favor online over traditional media, major Internet players like AOL, Yahoo, Google and Amazon are acquiring online advertising companies or offering new technologies to help advertisers deliver more compelling ads to the most appropriate online consumers.

Total advertising spend in the U.S. declined 0.3% in the first six months of the year. But online display advertising was up 17.7%, says TNS Media Intelligence. That helps explain why major Internet players are rushing to acquire online advertising companies and introducing new technologies to help advertisers deliver more compelling ads to the most appropriate online consumers.

Among the recent developments:

- AOL launched a new advertising service called Platform A that incorporates several acquisitions.

- Yahoo Inc. acquired BlueLithium, a company that targets ads based on consumer behavior.

- Google Inc. introduced ads that incorporate rich media and is pursuing its acquisition announced earlier this year of ad network DoubleClick Inc

- Amazon.com Inc. plans to expand use of its Clickriver system for delivering pay-per-click ads on Amazon.com based on web page content.

All these big players-along with Microsoft, which acquired online ad agency aQuantive earlier this year-want to offer a full menu of online advertising options, says Greg Sterling, a consultant who specializes in web advertising. “They are acquiring technology platforms and capabilities they don’t currently have because their competitors are doing the same,” he says.

AOL is a prime example of a big Internet player moving rapidly to acquire a wide range of online ad services. Its Platform A will include the expertise of such newly acquired firms as behavioral targeting specialist Tacoda, mobile media network Third Screen Media and video ad server Lightningcast.

Underscoring its shift from reliance on selling consumers subscriptions for Internet access, AOL announced it is moving its headquarters from northern Virginia to New York City to be in the center of the advertising world. “It’s looking to attract budgets from huge brand advertisers-who need an alternative to poorly performing TV media,” Forrester Research analyst Shar VanBoskirk wrote in a blog posting.

Yahoo is also moving to round out its advertising offerings with the acquisition of BlueLithium, paying about $300 million for the 3-year-old company that serves ads to 1,000 web sites and specializes in targeting ads based on consumers’ online actions.

BlueLithium’s AdPath Behavioral Targeting service, for instance, would present a different ad to a frequent traveler than to a music lover. The company also offers a “remarketing” service that follows visitors from one site to others in the BlueLithium network and serves them ads designed to bring them back to a client’s site.

For its part, Amazon plans to expand use of Clickriver throughout its international sites, but isn’t specifying when or if it will make Clickriver available to other retail branded sites including Bombay and Target that operate on the Amazon e-commerce technology platform. LuggageOnline.com has been using Clickriver for several months with good results, says Tim Jacobsen, vice president of e-commerce. “Clickriver isn’t giving us the volume of Google or Yahoo search marketing, but it’s been performing better in terms of cost per sale,” he says.

Meanwhile, Google last month unveiled Gadget Ads, which let advertisers incorporate rich media into display ads. For instance, a Gadget Ad from carmaker Honda includes backstage video clips of rock group Fall Out Boy, updates on the band’s tour and the opportunity for a consumer to e-mail the band a question.

Overall, the advertising initiatives by these big players are good for marketers, Sterling says, because they simplify the technology of online advertising and make it easier to get a full range of online ad services-search, display and behavioral targeting-from one source.

don@verticalwebmedia.com

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