WASHINGTON, May 13, 2015 – Yesterday it was announced that the wireless giant Verizon would acquire AOL (formerly known as America Online) to the tune of $4.4 billion. Terry Ponick wrote a great article about the acquisition yesterday, explaining the situation.
At first glance this acquisition may seem a bit strange. Why is a major wireless company acquiring a declining internet company turned publisher? Some have suggested that it’s because Verizon is interested in getting into content publishing.
While this theory does make sense, there is definitely more going on here. This is especially true since it is now being rumored that AOL is looking to spin off its largest publisher website: the Huffington Post.
When people think of AOL, they tend to think of the old dialup service that made AOL a household name in the 90’s or they think of sites like the Huffington Post. What many people do not know is that over the last few years, AOL has been transitioning from a content company into an Adtech company. ‘
This is why the AOL/Verizon merger may not be so stranger after all.
Last month, AOL launched it’s “One by AOL” unified advertising platform. This new platform consolidates all of AOL’s different ad platforms, including its programmatic ad exchange “Marketplace,” its high impact ad platform “Pictela” and its programmatic video ad exchange “Video Marketplace.”
What is programmatic ad buying?
According to George John, CEO of the Adtech company Rocket Fuel, “Generally, programmatic buying is similar to programmatic stock trading insofar as buying happens as the result of a computational proxy bidding on behalf of human masters.”
Are you with me so far?
If you can see the ads on this page (assuming you aren’t using an ad blocker) then you are probably seeing an ad that was brought to you programmatically. During the nanoseconds it took this article page to load, thousands of advertisers bid programmatically to have their ad shown to you the reader.
While AOL has had this advertising technology for a few years now, it has given a great amount of attention to video advertising, especially programmatic video advertising as well as mobile advertising. This makes sense as video advertising is the fastest growing ad format out there.
This is precisely why the AOL/Verizon merger makes perfect sense and may even be a brilliant strategic move. Video ad platform Videology’s CEO Scott Ferber explains why the merger is brilliant: “AOL gets distribution and access to unique user data at scale from Verizon in the U.S. and Verizon gets content and ad monetization through AOL’s technology asset.”
When looking at it from the Adtech perspective, the merger makes perfect sense.
Currently there are two giants in the digital advertising world, Google and Facebook, with Google being number one. Could the AOL/Verizon merger give Google and Facebook a run for their money?
AOL’s CEO Tim Armstrong seemed to think so when he said that AOL is “building toward being one of the top three in this area.”
It is uncertain what the future will hold for both AOL and Verizon. However, it will definitely be an exciting next couple of years for both companies as they attempt to take on the giants.