• by Wendy Davis , Staff Writer @wendyndavis, February 27, 2007

AOL is in talks to buy mobile ad company Third Screen Media for as much as $80 million, according to The Wall Street Journal. News of the talks comes several months after discussions between Third Screen and Microsoft failed, according to published reports.

Third Screen, a Boston-based start-up, has been keeping a high profile even apart from the acquisition talks. Recently, the company signed ad deals with several large companies. Last December, Universal McCann tapped the firm to manage mobile media efforts for clients including Microsoft, Johnson & Johnson and Intel. Additionally, Third Screen recently struck a deal with MSNBC to sell ads and manage inventory on its mobile site, joining a roster of publishers including USA Today, the Weather Channel and CBS SportsLine.

The increased activity comes as spending on mobile ads is surging. Third Screen recently told OnlineMediaDaily that average mobile campaign budgets increased to $150,000 from $25,000. Today's Journal pegs the average ad campaign at $200,000.

What's more, mobile ad spending is expected to grow tenfold in the next four years. EMarketer recently predicted that U.S. companies will spend $4.8 billion advertising on mobile devices in 2011 -- marking 12% of that year's total ad spending --up from $421 million, or 2.6% of overall U.S. ad dollars, last year.

Still, despite the bullish predictions, significant questions remain -- not least of which is whether consumers will accept mobile ads. Some observers maintain that because cell phones are more personal than TV sets or radios, ads on the devices won't go over well. For now, mobile ads don't seem to have sparked much of a backlash. But whether consumers will accept such ads after they lose their novelty remains to be seen.