• Financial Times, Friday, January 19, 2007 11:31 AM

Can't say we didn't tell you so, but the acquisition of Advertising.com by AOL in 2004 is proving to be the best deal the Web giant ever made. Whereas other parts of its business tanked, Advertising.com, which buys ad inventory and resells it to advertisers through a variety of programs on a cost-per-thousand or cost-per-action basis, has thrived. Indeed, the ad network's steady growth was a big reason AOL could successfully leave behind its subscription business and focus instead on selling ads.

Most importantly for shareholders, AOL has suddenly transformed from a dead weight to a driving force for Time Warner's stock price, which suffered ever since AOL's disastrous acquisition of the giant media firm in 2000.

The acquisition of Swedish firm TradeDoubler, a giant of Web advertising in Europe, closely mirrors that of Advertising.com two years ago. TradeDoubler's specialty is matching direct marketers to Web publishers whose audience might be interested in their products in exchange for a cut of sales. AOL is set to purchase the company for $900 million in cash--about twice what it paid for Advertising.com (That's Web inflation, for you). It hopes for a similar success.

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