Verizon has agreed to purchase AOL in an all-cash deal of $4.4 billion, a move that will help the telecom giant grow its mobile video and advertising business.
The deal is expected to close this summer, subject to regulatory approval.
“Verizon leads in mobile and mobile video, and AOL leads in video and programmatic advertising. The combination creates the first and most powerful media technology company on the planet,” an AOL spokesperson tells ClickZ.
The acquisition would give Verizon access to advanced programmatic technology that AOL has developed for selling and buying ads, along with other AOL assets, including the Huffington Post and TechCrunch.
“The key to Verizon’s buy of AOL is the programmatic ad tech it gets in the bargain. Mobile video has been universally under monetized, while programmatic is a perfect tool to help remedy that,” says Jim O’Neil, principal analyst at Ooyala, an online video technology company. “And that’s the piece Verizon will need to launch its mobile video service this year and make it profitable.”
For AOL’s part, industry participants believe that Verizon’s data will enable the company to compete with digital advertising giants like Google and Facebook.
“AOL One is supposed to be a holistic tech stack that goes across mobile, video and standard desktop. When it comes to the market, there’s always a question of how well AOL could live up to that promise. It’s hard for advertisers to buy into that when other players like Google have larger data sets,” says Brian Nadres, director of programmatic media for agency The Media Kitchen. “Verizon enhances their data and can help AOL connect those dots.”
For example, AOL will be able to benefit by reducing its reliance on cookies and targeting exact mobile device IDs.
Video on demand is another huge opportunity and AOL has transformed into a juggernaut in this arena. The company falls just behind Google-owned YouTube and Facebook in unique video views, according to ComScore.
“Marketers can attribute video with the rest of their digital tech stack and potentially find how well that contributes to conversion that might occur on desktop, mobile and search. I think the union between what AOL has from an ad-tech standpoint and what Verizon has with devices really helps bridge those connections,” comments Nadres.
Regardless of all the opportunities, Nadres believes that marketers should still remain cautious, specifically around issues of privacy.
“Verizon has already been caught in privacy issues with its ‘super cookie’ tracking. I’m curious to see how the union will work around privacy and what reaction to that will be,” he notes.
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