AOL buys mobile ad company Third Screen Media

NEW YORK (Reuters) - Time Warner Inc.'s (TWX.N) AOL Internet division said on Tuesday that it had purchased mobile advertising company Third Screen Media, as interest in ads on cell phones burgeon.

Financial terms of the deal were not provided.

Third Screen Media, whose technology serves ads on text messaging, mobile video and phone-screen formatted pages as well as in downloadable formats, will remain in Boston and become a division of AOL's Advertising.com unit.

The deal "lets us offer advertisers a more complete set of solutions, from display advertising to search and now a superior set of mobile solutions," AOL Chief Executive and Randy Falco said in a statement.

Mobile phones are seen as one of the biggest potential new growth areas for advertising, but this market has been slow to take off as wireless carriers are just beginning to build their ad strategies.

Unlike the Internet on computers, carriers wield more control over what is offered on cell phone screens. Media and services available from one company, such as Verizon Wireless (VZ.N), may not be available on another, such as AT&T. (T.N)

Carriers are also wary of drawing the ire of their paying customers by bombarding them with unwanted ads.

But media and Internet companies are pinning hopes for future growth on advertising-supported entertainment on cell phones, devices that users always carry with them.

In a recent flurry of similar deals, Microsoft (MSFT.O) in May purchased ScreenTonic SA, a Europe-based mobile ad company to expand its own advertising system.

The U.S. mobile advertising market is expected to reach $4.7 billion by 2011, up from $421 million last year, according to eMarketer figures furnished by AOL.

The deal helps round out AOL's ability to offer several ways for advertisers to reach digital audiences. The Time Warner division restructured its business last year and began offering most of its services for free to boost online ad sales.