• by Gavin O'Malley  @mp_gavin, May 21, 2009

Hoping to offer clients new monetization opportunities, content delivery company Limelight Networks has acquired video ad insertion firm Kiptronic.

Financial terms of the deal were not disclosed. Citing unnamed sources, Dan Rayburn, EVP of StreamingMedia.com, a Web site and industry association, said the deal set Limelight back about $12 million.

Jeff Lunsford, Limelight's chairman and chief executive, said the acquisition was necessary to address consumers' rapid adoption of new technology, particularly with regard to mobile devices.

"A sweeping change in consumer behavior is driving a migration of media consumption from the PC to a wider variety of Internet-connected and mobile devices," Lunsford said. "The distribution and monetization of content on these devices is complex and difficult to implement in a scalable fashion."

Kiptronic's Web-based tools are designed to help advertisers detect and serve dynamic video ads to connected devices. Publisher partners include NPR, Fox, The Guardian, Conde Nast, The Economist, and NBC.com.

Kiptronic's 15 employees, including CEO Bill Loewenthal and founder and chief technology officer Jonathan Cobb, are expected to join Limelight, and remain at their San Francisco offices at least until the end of the year.

Last year, Microsoft was rumored to be considering an acquisition of Limelight.

"Why would Microsoft want to buy Limelight, the unprofitable No. 2 player in the [content delivery network] business behind Akamai?" asked blogger Henry Blodget of Silicon Alley Insider: "Here's one explanation: Microsoft's entire business infrastructure is built around desktop servers and PCs. The entire business infrastructure of Microsoft's most fearsome competitor Google, meanwhile, is built around the wave of the future -- 'cloud computing' -- in which millions of devices interact with vast data centers and server farms out on the network."