AOL picks up Tacoda, behavior-based advertising network

updated

Web portal AOL said it has agreed to buy Tacoda, a company that delivers targeted ads based on a visitor’s browsing habits.

It is the latest move by Web giants to buy up companies that help them boost advertising, and reflects AOL’s move to rely more on advertising revenue amid a plunge in paying subscribers.

The amount was undisclosed, but the NY Post is putting it at $200 to $300 million. [Update: Dow Jones is using the $300 million number, but this is also unattributed, so no firm conclusions yet.]

AOL, the online unit of Time Warner Inc., said the acquisition of Tacoda would help advertisers run more relevant pitches. Visitors who read a lot on new car models, for instance, will find automotive ads following them to Web pages on baseball. (AP has the story here).

Tacoda had raised a total of $33 million of financing since 2001 from Rho Ventures, Union Square Ventures, Masthead Venture Partners and Hanseatic Americas. Union Square’s Brad Burnham provides the back-story, about how Tacoda founder Dave Morgan followed Burnham into a cocktail party in his shorts in order to dog him for money.

Customers include About Inc., BusinessWeek.com, Dow Jones, the Albany Times-Union.com, USA Today and Weather.com.

Venture capitalist Jeremy Liew just wrote a column for VentureBeat noting how niche sites will do well, because of these new targeted advertising technologies.