Wed May 16, 2007 8:42AM EDT

(Adds details, background, adds byline)

By Kenneth Li

NEW YORK, May 16 (Reuters) - Time Warner Inc.'s (TWX.N: Quote, Profile, Research AOL Internet unit said on Wednesday it purchased a controlling stake in Adtech AG, a German online advertising management company, to expand the volume of ads it delivers to big Web sites in Europe.

Adtech, based in Frankfurt, serves Web publishers in 25 countries and provides technology that lets publishers manage and report on their Internet ad campaigns.

Financial terms were not disclosed. Adtech will become a majority-controlled subsidiary of AOL's Advertising.com division.

The Adtech deal is a smaller, European-focused example of the consolidation sweeping the online advertising market in the wake of Google Inc.'s (GOOG.O: Quote, Profile, Research purchase of DoubleClick for $3.1 billion and Yahoo Inc.'s (YHOO.O: Quote, Profile, Research acquisition of Right Media.

Speculation is swirling that companies like 24/7 Real Media Inc. (TFSM.O: Quote, Profile, Research could be next to be snapped up. Analysts said that aQuantive Inc. (AQNT.O: Quote, Profile, Research and ValueClick Inc. (VCLK.O: Quote, Profile, Research could also be targets.

The stake purchase is aimed at deepening AOL's online ad technology, following a deal on Monday to buy mobile advertising company Third Screen Media and last year's deal to buy audio and video ad technology company Lightningcast.

Time Warner has staked AOL's future on the growth in online ad sales, which increased 40 percent in the first quarter this year and are expected to rise on par or better than industry averages, the company has said.

The company's share price also hinges on the success of a strategy to transform AOL from a subscription dial-up Internet business into an online advertising juggernaut.

AOL's previous $900 million offer to buy into the digital marketing business in Europe -- TradeDoubler AB (TRAD.ST: Quote, Profile, Research -- was thwarted by large shareholders of the Swedish firm earlier this year.

Adtech customers include AOL, Clear Channel Outdoor in Sweden, Frankfurter Allgemeine Zeitung's FAZ.net, British publisher Emap, Reed Business Information and British Sky Broadcasting's (BSY.L: Quote, Profile, Research Sky.com.