AOL has announced it will acquire TACODA, an ad network that specializes in online behavioral targeting.

While financial terms of the deal were not formally disclosed, a source close to the situation said AOL was paying $275 million in cash for Tacoda, according to Reuters.

Web technology and media companies have caused a stir in the world of online ad firms of late, making acquisitions such as Google's proposed purchase of DoubleClick for $3.1 billion and Microsoft's planned purchase of aQantive for $6 billion. AOL has also purchased smaller ad firms including Third Screen Media, Lightningcast and AdTech AG.

Last June eMarketer reported that the behavioral targeting market was expected to increase to $3.8 billion by 2011, up from $350 billion in '06.

TACODA enables advertisers to serve ads based on the online behavior of consumers. With this functionality AOL will be able to extend its targeting capabilities, as well as the reach of its third-party display network, the largest in the US.

Moving forward, TACODA will function as a wholly-owned AOL subsidiary.