The online advertising business, whether it be display advertising, pay-per-click or pay-per-call is in bull mode. Giants like Google (GOOG), Yahoo (YHOO), Microsoft (MSFT) have recently snapped up a host of players in the business. First, lets look at the different types of companies in this space.

Microsoft, Google and Yahoo are the big players that are consumer facing. They get enormous traffic on their portals and search engines and that allows them to display ads on their sites.

Companies like Doubleclick, 24/7 Real Media, Aquantive and Valueclick (VCLK) partner up with advertisers and serve up ad's not only on Google, Yahoo and MSN, but also on other widely circulated venues. They act as agencies to their advertisers and also have technology that serves up a variety of digital marketing mix for their clients including video and display advertising.

Companies like Visual Sciences and Omniture (OMTR) provide analytic tools to monitor ad performance, traffic, conversion, transactions and site performance. They enable advertisers to analyze and fine tune their online marketing campaigns.

Then there are specialists like Offermatica that allow creative testing on a website or page. They allow serve up different versions of a webpage to visitors and monitor performance, stickiness and usability of each version so site owners can apply the best pages to their final product.

Ingenio excels in pay-per-call, so advertisers have to pay Ingenio or their clients a fee everytime a consumer calls the advertiser via a dedicated phone number served by Ingenio.

Commission Junction allows advertisers and website owners to connect directly with each other. Advertisers who sign up with CJ have access to small site owners who wish to serve ads on their site.

Revenue Science does behavioral targeting - when a user demonstrates an interest in a particular product or service through his browsing patterns, Revenue Science serves him/her ad's that would match his interests. Recently, I was looking into purchasing Business Plan Pro and in the process, I went to their website. After a couple of days, I got an email from their parent company Palo Alto Software with a promotional offer if I were to purchase their software. Since I didn't provide my information to Palo Alto during my site visit, I can only assume this is the result of behavioral targeting - creepy but smart.

Medio serves ad content on mobile devices.

Compete provides web analytics and statistics on any domain out there, including your competition. The only caveat is of course that they are limited to the data they get from users who have installed their toolbar.

Despite mentioning a number of digital marketing players, I have barely scratched the surface. All I can say is that digital marketing remains a very young and fast growing segment of advertising and the recent consolidation in this space is living proof of that. Consider Microsoft's purchase of Aquantive, Google's purchase of DoubleClick, Yahoo's purchase of Right Media and Omniture's purchase of Offermatica and Visual Sciences.

One can only guess who will be next. My money is on AOL and on ValueClick. Since AOL cannot be owned by itself, I would recommend owning ValueClick for both its business and the potential of a buyout.

-- Faisal Laljee
Full disclosure: I am long OMTR and YHOO, but do not own VCLK or GOOG. However, my positions can change anytime without notice.