AOL Buys Video Ad Company Lightningcast

AOL on Thursday said it has bought Lightningcast Inc., which specializes in inserting ads in online video and audio.

The purchase is a reflection of the importance AOL is placing on video advertising as an increasing number of consumers watch online video. Financial terms were not disclosed, but Lightningcast would continue to be based in Washington, D.C., and become a subsidiary of Advertising.com. The latter Baltimore, Md., company is a subsidiary of AOL, which is a division of Time Warner Inc.

Tom MacIsaac, chief executive of Lightningcast, would continue running the company, which has 34 employees, Dulles, Va.-based, AOL said.

In addition to its audio and video services, Lightningcast offers campaign management, reporting tools for advertisers and a network of publishers.

"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.

More than half of the online population in the United States has watched video on the Web, according to ComScore Networks. Driving online video is the switch to broadband. By 2010, 78 percent of the projected 88 million online U.S. households are expected to have high-speed connections, according to JupiterResearch.

AOL first used Lightningcast in 2002 for its AOL Radio service. It later extended the company ad-insertion platform to AOL Video and the recently launched In2TV, a partnership with Warner Bros. that features reruns of classic TV shows.