American broadband and telecommunications company, Verizon Communications, has announced the signing of an agreement to purchase AOL Inc – which owns ONE by AOL Platforms (formerly Adap.tv), the Huff Post and more.
The deal is worth approximately US$4.4 billion and covers all of AOL's assets, such as TechCrunch, Engadget and more – creating a “scaled, mobile-first platform offering” directly targeted at what eMarketer estimates is a nearly US$600 billion global advertising industry.
Verizon chairman and CEO Lowell McAdam said the acquisition supports its strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.
"AOL has once again become a digital trailblazer, and we are excited at the prospect of charting a new course together in the digitally connected world,” McAdam said.
“At Verizon, we've been strategically investing in emerging technology, including Verizon Digital Media Services and OTT, that taps into the market shift to digital content and advertising.
“AOL's advertising model aligns with this approach, and the advertising platform provides a key tool for us to develop future revenue streams."
Mitch Waters, managing director at AOL Platforms ANZ, said it's a very exciting time for the business in Australia and New Zealand.
He said the deal means AOL Platforms will become a division of Verizon and will oversee AOL’s current assets, plus additional assets from Verizon that are targeted at the mobile and video media space.
“If you consider the macro-tectonic shifts that are happening in the global media industry, mobilisation of the internet, screen fragmentation of video audiences and programmatic trading, this deal puts us in a leading position for all three,” Waters said.
He said this does not alter the company’s vision and strategy - it only enhances it.
“This deal will add a mobile lens to everything we do inside of our content, video, and ads strategy,” he said.
“The combination of Verizon and AOL brings us to the scale of Facebook and Google.”
He said locally, AOL Platforms is still committed to the road to ONE by AOL and will continue to bring the necessary product infrastructure to market throughout 2015.
Commenting on the acquisition, RadiumOne's MD APAC, Kerry McCabe, said the deal makes perfect sense.
“Verizon moving from a big telco to a big mobile content provider is logical,” he said.
“It allows for a deeper and broader offering to their customers and supports a Google and SVOD compete strategy when you think about it purely from a mobile video consumption viewpoint.”
Speaking to AdNews at this morning's AIMIA event, Rocket Fuel's VP, mobile and international, Mark Prior, said most people would agree that the telco companies are looking to take a more active role in the content that's being created - and act less like an access point to that content.
“They want to play a larger role in data, and interacting with consumers,” Prior said.
“They've had mixed success in doing so, but AOL represents a legacy visual platform and has great success in that area. So by combining a technology platform that is able to identify and interact with consumers, Verizon is one step closer to avoiding becoming that 'dumb pipe' they're concerned about becoming.
“It will become a more meaningful part of the whole conversation.”
He said the acquisition brings up a whole heap of subtleties around data usage that are quite challenging.
He said, for example, Verizon gained some bad press in the US for trying to activate its data in a way that was while legal, was not consistent with the expectations that a customer of theirs would expect.
“They got some very bad press for crossing a line that nobody in advertising technology would cross, which is creating an identifier and associating data with a consumer that the consumer didn't know about and couldn't opt out of,” Prior said.
He added that traditionally telco companies have not been effective in their monetisation of their data outside of their own network and dealing with their own customers.
“The acquisition of AOL, that brings the conversation to a head and I expect they're going to have to have some very difficult conversations internally around what the walled garden looks like, in terms of the sharing of telco data with the visual media data.”
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