UPDATE: Google has now confirmed the deal.
————
Google has indeed bought ad technology start-up Invite Media, I’ve confirmed with multiple sources.

As I wrote last month, Invite is a three-year-old “demand-side platform” designed to help buyers navigate high-volume display-advertising exchanges–like the one Google launched last year.

I don’t have  a price for the deal nailed down, but I believe it’s in the $70 million range. Google (GOOG) declined to comment; I haven’t heard back from Invite Media CEO Nat Turner.

People familiar with the transaction say Google’s plan is to leave Invite running as a standalone unit, which will work at arm’s length with exchange’s like Google’s AdX, as well as competitors like OpenX, Yahoo’s (YHOO) Right Media and Microsoft’s (MSFT) AdECN.

That makes sense, because ad buyers who use Invite, like Publicis’s Vivaki, expect to be able to buy inventory from multiple exchanges.

But over time, Google does plan on investing in Invite and integrating it with DoubleClick for Advertisers, its ad-serving technology. Invite users wouldn’t be required to use DFA, but the two would be designed to match up seamlessly, sources said.

It will be interesting to see what becomes of Invite’s competitors, like MediaMath, Turn and X+1, in the wake of this deal. Venture capitalists have poured money into demand-side platforms in recent years, but I’ve heard increasing skepticism about valuations those investors are seeking. And now the most obvious buyer, with the deepest pockets, is off the table.

Turner and his co-founders started Invite Media when they were still undergraduates at the University of Pennsylvania; the company has offices in Philadelphia and New York City. Investors include Comcast’s (CMCSA) venture arm and First Round Capital.

Invite had previously considered selling to Omniture last summer, but that deal went away after Adobe (ADBE) purchased the analytics company.

While there have been reports that News Corp. is selling off its advertising unit, Fox Audience Network, the company has actually been in talks with a variety of private equity firms about spinning it off and selling only a 20 to 30 percent chunk of it.

Such a deal might not happen, of course, but the strategy behind this approach is related to a desire to create a strong consortium of advertising networks to fight the growing power of Google in the race to match display ad buyers with display ad sellers.

The worry: If Google (GOOG) dominates that business in the same way it dominates search, it’s game over.

The strategy is being spearheaded by News Corp. (NWS) digital head Jon Miller, who has played a role in a variety of moves by the media giant to thwart Google in the content space.

Also involved is Adam Bain, who runs FAN and who would be CEO of the potentially independent unit. The well-regarded exec has been of interest to a number of other companies of late, so a new company might also be a way to keep him in place.

Sources said Miller began to get some incoming investor interest in buying FAN, which has morphed into the current talks.

FAN sells ads for MySpace and other News Corp. sites, as well as some third-party partners. It is in the Top 10 of ad networks, with 147.6 million unique monthly visitors.

Under one possible scenario, which values FAN at about $150 million, a private-equity player–such as Silver Lake Partners–would own a piece but also guarantee a certain amount of additional funding to spur growth.

The goal here is to take on Google and its ad-buying power either by rolling up ad networks or exchanges or by “federating” them–pulling them into an alliance.

Critically important to such an ambitious plan by News Corp. is cooperation from at least one of the trio of big of ad networks at Microsoft (MSFT), Yahoo (YHOO) and AOL (AOL).

In addition, other ad networks could be part of the group, such as OpenX, which is strong in Europe. Interestingly, Miller is the chairman of Los Angeles-based OpenX.

There is, of course, a mass of onerous logistical issues with such a scheme, including a variety of technical differences among ad exchanges and the need for cooperation among many different companies.

“We would not want this to be ad confederation light,” said a source at one major player in the space. “Because then it’s worse than working alone.”

In addition, not everyone is worried about Google–despite its acquisition of DoubleClick–taking over the display network space as easily as it took over the search market. Currently, while AOL has the top spot, there is no dominant player akin to Google’s overwhelming position in the search market.

News Corp. declined to comment about its plans for FAN.

(Full disclosure: News Corp. owns Dow Jones, which owns this Web site.)

To date, the company–which makes the leading open-source ad serving software, catering to about 30,000 Web publishers on 100,000 Web sites–has raised $30.8 million. “We raised $15.5 million at the end of 2007 and still had a chunk of that left, so we didn’t have to raise money,” OpenX CEO (and former Yahoo Senior VP) Tim Cadogan told The Deal. “But if it’s generally true that it makes sense to raise money when you don’t need it, in this environment, it is triply true.”

Quadruply true when you’re competing with the likes of Google’s (GOOG) Double Click and Yahoo’s (YHOO) Right Media, which dominate the Internet advertising market in which OpenX plays.

Former Yahoo Senior Vice President Tim Cadogan will take the CEO job at OpenX, the popular open-source ad server start-up, backed by Index Ventures, Accel Partners and others.

As part of the change, the company will move from its London HQ to Los Angeles. OpenX has about 30 employees, including 10 developers in Poland, but not all will be moving West.

Cadogan was with Yahoo (YHOO) for five years, in its search unit and later as SVP for ad products, including playing an important role in the launch of its Panama ad search product. Previously, he was an early member of the GoTo.com team and went to Yahoo just before it acquired Overture.

Cadogan will now run OpenX (which recently changed its name from OpenAds), which makes the leading open-source ad serving software, catering to about 30,000 Web publishers on 100,000 Web sites in more than 100 countries.

Until now, OpenX has been helmed by James Bilefield, another former Yahoo exec, who was also VP of Global Business Development and GM of European operations for Skype.

OpenX has raised about $21 million in funding since 2007. Besides Index and Accel, other investors include First Round Capital, Mangrove Capital and O’Reilly AlphaTech Ventures. Former AOL head Jon Miller also recently joined its board as chairman.

“With open-source software, there is a lot of potential for business disruption and to open up the market,” said Cadogan in an interview with BoomTown from London. “You have not really seen open-source models really applied to the ad space until now…but there is a big business in giving publishers a really robust offering and a platform where they can also share what they build.”