AOL + Verizon = Scale Of Google, Facebook

AOL, which was once tied in an ill-fated marriage to a telecommunications giant, is tying the knot once again. This time it’s Verizon, which announced a $4.4 billion acquisition of AOL Inc. And once again, the companies are touting the benefits of synergy, scale and the ability to compete on the basis of unparalleled consumer and business benefits.

In a tout sheet following this morning’s announcement, AOL boasted its combination with Verizon “brings us the scale of Facebook and Google,” noting that “Verizon touches 70% of Internet traffic across 1.5 billion PCs, TVs and mobile devices.”

That would be some powerful arithmetic, considering that neither AOL nor Verizon currently rank among the top 30 media suppliers to Madison Avenue, according to report released by Publicis’ ZenithOptimedia Monday. That report shows Google ranked No. 1 and Facebook ranked No. 10, but is growing fast.

While the benefits to Madison Avenue remain to be seen, the deal clearly offers immediate benefits to AOL shareholders, who will receive $50 per share from Verizon, and generating about a 150% return on investment since AOL began its “turnaround.”

How AOL will impact Verizon’s advertising and media assets is not clear, but AOL has been a leader in the shift to programmatic and data-based audience trading, so if it can help unlock data about the millions of online, mobile and television subscribers, it could have a profound impact on advertisers’ ability to scientifically target and buy consumer reach.

At presstime, the companies said AOL will continue to operate as a wholly owned subsidiary of Verizon, led by AOL Chairman-CEO Tim Armstrong, following its acquisition.

“The visions of Verizon and AOL are shared; the companies have existing successful partnerships, and we are excited to work with the team at Verizon to create the next generation of media through mobile and video,” Armstrong said in a statement announcing the deal.
3 comments about "AOL + Verizon = Scale Of Google, Facebook".
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  1. Henry Blaufox from Dragon360, May 12, 2015 at 10:18 a.m.

    I don't think we should overlook the importance of the AOL tech platform to Verizon. Verizon has been slow to develop and deploy enterprise software on its own, a situation going back decades. This shouldn't be a surprise, given the firm's large size, breadth and complexity of operations, as well as its less than agile bureaucratic structure that goes along with being bound to government regulatory agencies. So Verizon and its predecessors (the "phone companies") have relied on outside tech firms for decades.

    Look for the AOL tech units to make a major contribution to Verizon going forward, as long as they aren't slowed or strangled by bureaucracy. It's been my experience that tech types and corporate staff worried about regulators don't play well together.

  2. George Simpson from George H. Simpson Communications, May 12, 2015 at 11:52 a.m.

    Still waiting for Time Warner to take the $200 per share Paramount offer that was better than AOL's...good thing I am VERY patient.

  3. Leonard Zachary from T___n__, May 12, 2015 at 12:42 p.m.

    Convergence of the Broadcast, Digital and Wireless industries. The Broadcasters are seriously outflanked and poorly positioned with a viable technology platform than a "Me-Too" Wi-Fi App solution which enables scale audience fragmentation than scale Audience Aggregation. The Broadcasters still have Retrans fees but how long can that really last in a hyper-competitive landscape?

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