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Internet giant you may still remember (AOL) gobbles vid ad biz Adap.tv

Blows $322m to become 'number two' to Google's YouTube

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AOL has bought advertising company Adap.tv in a bid to future-proof its online video services.

The internet giant claimed the acquisition will make it the second biggest player in the online "video space", presumably behind Youtube.

Adap.tv specialises in programmatic advertising, which allows media buyers to avoid the bulk purchase of ad space from Mad Men-style salesmen. Instead it uses an automated system that allows sophisticated targeting and real-time analysis of any ad campaign's impact.

According to Adap.tv, one out of every eight video ads is bought using their system.

Tim Armstrong, chairman and CEO of AOL, told CNBC News: "Three or four years ago most people thought that AOL wouldn't be around at this point. Today we are announcing a deal which will make us the number two video player in the marketplace and essentially double AOL's revenue in the video space and bring us up to 150 million unique visitors in video."

He added: "The way people think about Google for search, you could think about adap.tv for video."

AOL also posted positive second-quarter results. Although the firm's second-quarter profit of 2013 fell 97 per cent year on year to $28.5 million, it put the change down an earlier $1bn deal to sell patents to Microsoft.

Revenue grew by about two per cent to $541.3m, up from $531.1m in the same period last year.

In a canned statement, Armstrong added: "Two trends are prevalent in the video space right now – the movement from linear television to online video and the shift from manual transactions to programmatic media buying."

Adap.tv will operate independently as a part of AOL's video organisation. AOL paid $322m in cash and about $83m in AOL stock to slurp the ad firm. ®

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