Verizon’s pending
purchase of AOL for over $4 billion, announced Tuesday, appears to be a clear validation of Tim Armstrong’s ad tech acquisition strategy to piece together end-to-end platforms for both publishers, including AOL’s own Huffington Post and TechCrunch, and advertisers. What does the merger of AOL’s ad tech and content assets with Verizon’s pipes and scale mean for media buyers and the marketing technology landscape?
Andrew Ruegger, Partner and Director of Strategy for media buying giant GroupM told Marketing Land, he’s anticipating Verizon’s investment will pay off in “a richer quality of digital media buys for brands both traditionally and programmatically” as mobile ad spend on video ads, in particular, trends upwards with user behavior.
Ruegger, like others we spoke with, is looking forward to the new options media buyers will have in mobile with a new powerhouse competitor in the mix. “It will also be nice to see the 80 percent of current mobile ad spend shift away from the Facebook and Twitter duo as Verizon becomes a premiere player in the global arena with a unique reach we haven’t seen before.”
Adam Schlachter, Chief Investment Officer at DigitasLBi, added in a statment that Verizon’s scale will give AOL the capacity to compete not just with Facebook, Twitter and Google, but with the leading streaming platforms for TV ad dollars. “For AOL, the move was a long time coming. It has been setting itself up for acquisition with recent cuts and restructuring, and it needs a big partner to continue to spur user growth and add scale to compete with Google and Facebook in the ad space,” says Schlacter, “It’s also a good fit for content distribution as this deal gives it a mobile footprint it could never have on its own, making it a more viable competitor to content platforms like Amazon, Hulu, Netflix and YouTube.”
The deal also changes the look of what is considered a modern media company. For Verizon, the acquisition “fuels its efforts to redefine what a modern day access provider looks like as the world increasingly consumes more through mobile, on-demand, and over-the-top devices,” adds Schlacter.
Marketing technologist, Scott Brinker, Ion Interactive Co-Founder, President and CTO agrees that the combination may have a very significant effect on the competitive marketing landscape. “I think Verizon’s acquisition of AOL is particularly interesting because it represents vertical integration across the marketing technology channel — from software that marketers operate, to popular destination websites, to connectivity to individual users,” he says.
While much of the focus around the acquisition since the news broke has been around AOL’s ad tech capabilities as the driver for Verizon’s interest, David Smith, CEO and Founder of media planning and buying agency, Mediasmith, points to AOL’s media assets as a key factor as well. “Verizon, while a leader in distribution through their network, has been lacking in content. Comcast has a significant lead on them in this regard. The numerous AOL media properties, many of which stand on their own, combined with AOL’s programmatic selling and video content at last give Verizon a meaningful entry in the content wars.”
In response to the immediate questions about whether AOL plans to spin off certain, or all, parts of its media business, AOL CEO, Tim Armstrong, who plans to stay on after the deal closes, told TechCrunch (an AOL company) Tuesday, “We’re going to be in the content business … and if anything we’ll probably add more and more heft to our content business over time.”
Verizon brings AOL’s content distribution capabilities to an entirely new level, and by tapping AOL’s ad tech Verizon can power ad serving, targeting and attribution over IP TV through millions of smartphones.
As for where it puts Verizon among competing carriers, Shlachter says, “This means Verizon + AOL yields more opportunities to monetize all of their assets and customer touchpoints, giving them an advantage over other providers. Yes, AT&T bought Fullscreen last year and is set to acquire DirectTV later this year. And Comcast and NBC Universal came together a couple years ago. But none of these moves harness the vast amount of valuable customer data, at scale, that will be available through this new entity.”
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