To everyone who thought the social networking revolution had started to falter, Bebo has 850 million reasons to disagree after AOL agreed to acquire them for $850 million in cash. Analyst eMarketer predicts that by 2011, $4.1 billion will be spent worldwide for social network advertising, and in 2008 alone the global ad spend for social networking is expected to increase 75% year over year, amounting to $2.1 billion.

The Bebo community has something in the region of 40 million members worldwide, with a particular focus in the UK, Ireland and New Zealand. The deal comes just seven days after AOL's launch of Open AIM 2.0 to allow the developer community greater freedom to access the AIM network and integrate AIM into its sites and applications.

"Bebo is the perfect complement to AOL's personal communications network and puts us in a leading position in social media," said Randy Falco, Chairman and CEO, AOL. "What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetisation opportunities that leverage Platform-A across our combined global audience. This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers."

"AOL understands the shifting dynamics of the Web and has clearly demonstrated its commitment to leveraging the ever-increasing power of social networks," said Bebo President, Joanna Shields. "With one and the same vision in this area, it was a natural progression for Bebo to join AOL, and we look forward to working together to continue to expand the online social experience globally."