The latest news of the evening is that the AOL is gonna buy the BEBO, a well known socail networking site in UK, for a whopping amount of US $850 million, in cash. This comes from the formal announcement made by the company yesterday. AOL, is owned by Time Warner. He said that it sees opportunities to make money from advertising on BEBO, which has about 40 million unique users worldwide. AOL is the latest of the major online players to grab a piece of the social networking pie. Microsoft is working with Facebook to deliver advertisements, and media giant News Corp. owns MySpace, the widest-used social networking site.

The getting holds of comes as AOL has undertaken steps to revamp its business model from being an ISP to a media and content company. It has been conjectured that, AOL would be sold by Time Warner, and the company has struggled to reinvent itself.

The online Advertising technology called the Platform A, of the AOL would be integrated with BEBO. Platform A cobbles together innovations from several other AOL acquisitions, including Tacoda and Third Screen Media, intended to fill out its ability to deliver Web-based and mobile ads.

In the US, BEBO is ranked third behind MySpace and Facebook, but is first in New Zealand and Ireland and is widely used in the UK, AOL said. BEBO, a closely-held company, does not make public its revenue figures, which makes it difficult to gauge its financial success.

AOL Chairman and CEO Randy Falco defended the acquisition price stating that in terms of BEBO, they think that it’s an excellent asset at a great price. They have a proven track record of spotting value. Time Warner executives were incredibly supportive when AOL asked to go ahead with the deal, he added.

BEBO has looked to other ways to make money other than display advertisements, also. BEBO ran an online serial drama, Kate Modern, and sold product placement slots to businesses. It has also let retailers such as Nike create themed marketing pages, which has proven to be a less intrusive way to attract interest from users.

Facebook ran into trouble last year after a new advertising program, Beacon, caused a privacy outcry after users complained that it was too intrusive and stealthy in tracking their actions outside of the social-networking site. Facebook modified it twice to address the privacy concerns, some of which nonetheless persist.

AOL’s Chief Operating Officer Ron Grant said the company plans to “supercharge” the monetization of the site. But Falco said AOL would be very careful in making changes that could reduce its user base. Joanna Shields, BEBO’s International President, said that the users only see one ad per page now. AOL plans to integrate its AIM and ICQ instant messaging applications into BEBO, Falco said.