NEW YORK: AOL's journey from subscriber-funded dialup web provider to no-fee advertising-supported service has led to the acquisition of behavioural-targeting online ad firm Tacoda.

The deal will boost AOL's online ad tools as it makes use of Tacoda's technology to allow marketers to target messages to specific audience segments based on the kinds of websites they have visited.

AOL president Ron Grant is coy about the dollar details, but says the deal will "build on our advertising momentum ... by enhancing our ability to precisely target advertisements across an even broader network."

Industry researcher eMarketer forecasts that the market for behaviourally targeted advertising will increase to $3.8 billion (€2.76bn; £1.85bn) in 2011 from $350 million last year.

AOL's rivals have already tapped the lucrative potential of behavioural marketing, viz Google and its controversial $3.1bn purchase of DoubleClick and Microsoft's $6bn acquisition of aQuantive.

Data sourced from Wall Street Journal Online; additional content by WARC staff