While Verizon and AOL are both consumer-facing companies, analysts and industry watchers say their merging has more to do with data and ad technology.
Real-Time Daily has compiled reactions from around the ad industry:
Susan Bidel, senior analyst at Forrester: “Attribution is the holy grail in the age of the customer. The AOL acquisition by Verizon facilitates the combination of the carrier's data with AOL's ad tech stack, resulting in an enhanced ability to identify consumers across devices and more perfectly close the loop on the purchase process. It positions the combined AOL/Verizon as a direct competitor with Google and Facebook without the restraints of their walled gardens.”
Lauren Fisher, analyst at eMarketer: “AOL has done a great job of pulling together the pieces in digital advertising -- such as display, video, mobile and TV -- and providing options to advertisers in one platform. Advertisers are looking for better and more streamlined ways to reach their audience across screens, and coupled with Verizon's existing mobile and over-the-top (OTT) presence, the companies' combined ad offerings mean massive cross-screen reach with much richer audience data.”
Wells Fargo Securities analyst Jennifer Fritzsche, writing in a research note: “Verizon has been focused on delivering over-the-top video via mobile, with plans to launch a service this summer focused on short form live content. Verizon has mentioned it had several options to monetize this new service, including an advertising model, a premium subscription model or via pay per view. With the addition of AOL, Verizon should be well positioned to benefit from an advertising model in which Verizon can gather valuable information for advertisers and content providers. This should provide Verizon a stronger bargaining position in the connected TV, mobile media and advertising sectors.”
Dave Hendricks, president of LiveIntent: “Verizon's acquisition is a vindication of Armstrong's 'barbell' approach: AOL's strategy of owning both content and ad technology. By acquiring AOL, not only does Verizon acquire valuable media properties, but it also acquires a technology stack that enables advertising, marketing, distribution and attribution. In a world that is rapidly moving to 'people-based marketing,' the combination of AOL and Verizon is a potent platform for marketers to reach audiences new and known at scale. And Verizon adds in-house marketing expertise. Smart.”
Sarah Kahn, tech industry analyst at IBISWorld, writing in a research note: “If approved by regulators, the Verizon-AOL deal is expected to trigger a race among other industry players to invest their capital and research on mobile video consumption and advertising. In the short-term, Verizon is expected to maintain its position as an industry leader in wireless telecommunication, with AT&T close on its heels, especially with the latter’s attempt to acquire satellite TV provider DirecTV. The advertising and video race to consumers’ pockets has begun.”
Henry Blaufox, consulting business development and accounts director at DragonSearch: “I think this can have advantages for both firms. For Verizon, it is almost always easier to buy technology rather than build it themselves. That's a legacy of being a highly regulated telecom provider.”
He added: “Let's also not confuse the old AOL with the revamped company. Tim Armstrong has said repeatedly AOL is an ad tech provider, and this is what Verizon is buying. In my opinion, rapid, even real time audience targeting will grow in importance as viewers spend more time watching video transmitted digitally, not just mobile. Verizon will be positioned to handle traffic we now think of as the domain of broadcast or cable, and can garner a share of the ad placement revenue (one tenth of a cent per impression multiplied by a bajillion impressions is real money.)
“The AOL technology teams can 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 who worry about government regulators don't play well together."
Neil Nguyen, CEO at Sizmek: “The acquisition of AOL by Verizon is a testament to the value of mobile content, video, connected TV and programmatic advertising technology. Outside of the digital media industry, there’s been a lack of understanding about the value of digital advertising platforms and programmatic technology, but it’s clear after today’s acquisition that non-traditional media companies have a growing interest in this space as consumers interact with brands on all screens.”
Michael Collins, CEO of Adelphic: “We’re at a point in the industry where there isn’t a shortage of cross-device linking or device graphs. While Verizon’s purchase of AOL is good for AOL, it represents one more step towards supply-side fragmentation.”
Nathan Woodman, GM of U.S. demand at IPONWEB: “Verizon’s acquisition of AOL is a necessary countermeasure to Google's and Facebook's advances into the Telco's core business. It gives Verizon a set of media properties and tools that can help them transform into a traditional digital media company.
“The outstanding questions are whether or not Verizon/AOL will be able to compete with a traditional digital media business or if they will be able to unlock their data to drive a performance media business to rival incumbents.”
Patrick Hopf, president and co-founder of SourceKnowledge: “There has been massive growth in mobile video industry-wide, and AOL has made strides throughout the past year to build out their ability to deal with the shift in consumer behavior and industry ad-buying habits like acquiring Adap.tv and developing One by AOL. With AOL's ad stack, Verizon will be able to win revenues from big brands that want to be in the eyes and ears of the company's millions of customers."
Bill Day, CEO of Tremor Video: “Verizon’s acquisition of AOL is another in a long line of deals that validate the enormous opportunity in the video advertising space, which is recognized by major players across the technology, media and telecommunications industries. Verizon has had a front row seat when it comes to the growth of mobile video consumption so it’s no surprise that they would want to capitalize on the ability to combine subscription and advertising revenue.
“Video, particularly mobile video, is hard. The formats are different, measurement is not standardized, and consumers have a very different opinion of how advertising should look on their most personal device. AOL been a major player in the mobile content and advertising space for several years, so Verizon is also buying their expertise around how to make advertising in mobile work.”
Ben Maitland, EVP of sales and marketing at MultiView: “Analysts have lauded the acquisition as a mobile and content play. But equally important is the fact that AOL had a marketing technology infrastructure that will drive new growth for Verizon. Now an infrastructure company -- a carrier -- has a programmatic platform. This helps solidify the fact that programmatic is destined to be a utility. It’s an infrastructure for content distribution and not profitable as a product in itself as ad tech had hoped.”
Kirk McDonald, president of PubMatic: “The marriage of media and technology, specifically video and mobile, seems to be at the heart of this transaction. The years of investment required to build a competitive programmatic platform made AOL more attractive when considering what seems to be Verizon’s desire for speed to market. This is likely to be the outcome for many other scale players who realize that they have to accelerate their speed to market if they hope to compete with Facebook and Google. In the meantime, the ad tech sector still needs clarification. There is a line being drawn between the companies that are really media businesses with a small amount of workflow technology, and the companies with technology in their DNA who are building platforms for automating processes.”