Quigo, a Google Substitute, Being Sold to AOL

quigo-logo.gif AOL is set to pay $340 million (updated) for Quigo, which provides a contextual ad network alternative to Google. The deal includes PageCast, a video search product, and will be added to AOL’s impressive arsenal of network, behavioral and contextual services, including Advertising.com and Tacoda.

Quigo, an Isreali/New York company launched in 2000, was rumored to have been in play with a major Yellow Pages company, so it is an interesting change of fate. The way it ended up is interesting too — in part because Google owns 5 percent of AOL.

In this age of coopetition, however, AOL’s ties with Google don’t seem to represent a roadblock, or even an important enough reason for most existing Quigo customers to quit the service. As we have noted, Quigo has 200 traditional media properties in its network of 500 sites, including entities owned by Tribune, Cox Newspaper and Fox TV. Local media represents about 5 percent of Quigo’s business.

From AOL’s point of view, this might be the first time there have been actual synergies with Time Warner. Time Warner and Quigo made a big deal in July that gave Time Inc.’s 15 Web titles a custom version of Ad Sonar, allowing the online magazines to be sold as a single network. Time Inc. executives estimated that the Quigo deal will bring in $100 million in revenue over the next three years. It is ironic, because AOL might finally be spun off from Time Warner as Jeff Bewkes prepares to take over the chairman’s seat at Time Warner.

Paid Content notes that Quigo has raised $45 million since its founding in 2000. About $30 million of this money has been secured over the past year from existing backers, including Steamboat Ventures (Disney), Highland Capital, Glenrock Ventures, IVP and Meritech Capital Partners.

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