AOL acquires Third Screen Media, mobile ad company — consolidation begins

Updated

(Update: Separately, Nuance has agreed to buy VoiceSignal Technologies for $293 million, signaling further consolidation in the mobile voice search industry after Tellme’s acquisition by Microsoft.)

Time Warner’s AOL has gobbled up Boston-based mobile advertising startup Third Screen Media, signaling the beginning of consolidation in the industry.

Third Screen is just one of many start-ups founded in recent years, and intense competition between the players has caused some disturbing behavior, at Millennial Media for example. Other players include AdMob, Enpocket, Rhythm NewMedia and Ad Infuse. Microsoft bought ScreenTonic SA, a Paris-based mobile advertising firm, earlier this year.

The AOL deal was expected. A few months ago, the WSJ said Third Screen would likely be bought by AOL for $80 million. (Update: Dan Primack says the price was more like $110 million, but this isn’t confirmed)

The deal is a good one for Third Screen. It raised about $8 million in venture capital funding over the past four years, with the most recent $5 million coming last year from TD Capital Ventures, Blue Chip Venture Company and angels.

Wireless advertising in the U.S. will rocket to $4.7 billion in 2011 from $221 million last year, predicts eMarketer. Globally, the market will reach $11.3 billion in that time-frame, the group says. (Remember to take these figures with a grain of salt. You’ll recall how crazy the forecasts were during the last boom. The unassailable point, however, is that mobile phone use is growing quickly and that many more ads are going to be served).