TELECOM Digest OnLine - Sorted: AOL Purchases Video Ads Company

AOL Purchases Video Ads Company

Anick Jesdanun (ap@telecom-digest.org)
Thu, 18 May 2006 11:30:48 -0500

AOL Buys Company That Inserts Video Ads
By ANICK JESDANUN, AP Internet Writer

AOL LLC, signaling the importance online video will play in drawing
visitors to its ad-supported Web sites, has purchased a small company
that specializes in inserting advertising into video clips.

With the technology from Lightningcast Inc., AOL would be able to run
targeted ads within video and even change ads from time to time
without replacing the entire video file. Lightningcast's technology
also can insert ads into audio clips.

Financial terms of the deal, announced Thursday, were not disclosed.

AOL already has been using Lightningcast's platform since 2002. By
acquiring the company, AOL can better integrate sales and operations
with Advertising.com, the online ad business AOL bought in June 2004.

"This acquisition will provide a huge infusion of talent, technology
and publisher relationships for Advertising.com at a time when
streaming video is growing at a blistering pace," Mike Kelly,
president of AOL Media Networks, said in a statement.

Last month, AOL won the first Daytime Emmy presented for content
delivered via the Internet, cell phones and other small-screen
devices. Last July's "Live 8" concert special -- delivered in seven
separate feeds, all without the meltdowns common with early online
video events -- was widely seen as a milestone in Internet video.

AOL later launched with Warner Bros. the "In2TV" broadband network
featuring free viewing of dozens of old television shows like "Welcome
Back Kotter," "Sisters" and "Growing Pains." AOL and Warner Bros. are
both units of Time Warner Inc.

And earlier this month, AOL quietly opened its test of UnCut Video, a
site where users can share clips they made with camera phones and
camcorders, competing with the likes of Google Inc.'s video service
and YouTube Inc.

Lightningcast's technology works with all types of video - live,
on-demand streaming and downloads.

The development comes as AOL intensifies efforts at driving traffic to
free, ad-supported sites to compensate for declines in its traditional
business of Internet access subscriptions.

But AOL faces immense competition.

Apple Computer Inc.'s iTunes Music Store and Google Video offer clips
for sale, generally $1.99 for an episode of a television show.

CBS Corp. recently launched an ad-supported broadband channel,
"innertube," with specially created Web series and material that has
already run on television.

The Walt Disney Co.'s ABC is experimenting with making popular shows
available for free on its Web site, complete with ads that cannot be
skipped.

Time Warner shares were down 6 cents to $17.47 in morning trading
Thursday on the New York Stock Exchange. Lightningcast was privately
held before AOL's acquisition closed Wednesday.

Copyright 2006 The Associated Press.

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