AOL is in the process of acquiring New York/Israel-based ad targeting provider Quigo for $300 million, according to the Israeli daily Haaretz.

The rumour was first reported last week by the Web site All Things Digital.

The buyout is aimed to help the Time Warner unit better vie against online ad initiatives from Google and Yahoo. Quigo's two main ad serving products are AdSonar, which is similar to AdSense, providing targeted placements on Web sites and through searches, and FeedPoint, a search engine marketing tool.

Quigo has raised $45 million since 2000. The majority of the investments, about $30 million, has been secured within the past year from existing backers, including Steamboat Ventures (Disney), Highland Capital, Leon Recanati's Glenrock Ventures, IVP and Meritech Capital Partners.

Time Inc. and the contextual ad search company has already signed an exclusive agreement in June, which gave Time Inc.'s 15 web titles a custom version of Quigo's pay-per-click ad service, allowing the online magazines to be sold as a single network, according to paidContent.

Time Inc. estimated that this deal will bring in $100 million in revenue within the next three years.