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Summary:

AOL (NYSE: TWX) has bought out Sphere, a blog and news contextual display service, for an undisclosed amount. The startup operates in a crow…

AOL (NYSE: TWX) has bought out Sphere, a blog and news contextual display service, for an undisclosed amount. The startup operates in a crowded contextual content display space with competition from the likes of Inform, AggregateKnowledge and many others. Sphere will be part of the company’s programming division, under Bill Wilson.

The company, co-founded in 2005 by Tony Conrad, raised about $4 million in venture funding from the likes of Hearst Publishing, Trident Capital, True Ventures (where Conrad remains a partner) and About.com founder Scott Kurnit. Since its start, it has refreshed its business model a few times, from being a blog search engine (a business black hole till now) to a contextual content service provider for bigger sites such as WSJ.com, Time.com and others.

AOL had previously been working with Sphere to offer its widget technology on AOL News. The rationale from AOL’s side: From Ron Grant, AOL COO: “Not only will it let us enhance content on our own sites, it will let us distribute our content across Sphere’s growing third-party publisher network…In addition, this acquisition provides AOL with access to advertising inventory across Sphere’s network, while growing its reach to content publishers via the widget.

  1. This acquisition makes sense to me. Looking at Sphere, they seem to have a pretty wide coverage across quite a few leading sites. I tend to agree that buying into their advertiser base could have a lot to do with this. For a group the size of AOL, simply buying companies holding substantial ad inventory seem like a good road to expand in this sector.

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