Verizon's AOL Reportedly In Talks To Acquire Millennial Media

by Tyler Loechner , July 9, 2015

Verizon’s AOL is reportedly eyeing mobile ad network and ad exchange Millennial Media. TechCrunch, which is owned by AOL, first reported the story.

TechCrunch notes that price discussions are currently in the $300 million to $350 million range, well above Millennial Media’s current market capitalization of $202 million.

Fresh on everyone’s mind is Verizon’s recent acquisition of AOL for $4.4 billion, but prior to that deal, AOL had been on its own acquisition spree, so seeing it re-enter the M&A fray would come as no surprise.

Buying Millennial Media would also make sense for AOL, as the crown jewel of its ad tech stack is currently video. With mobile obviously top-of-mind for telco giant Verizon, AOL aiming to beef up its mobile tech capabilities is only fitting.

“This is no real surprise. We've been expecting some moves like this, and I expect there's more to come,” said Angela Steele, CEO of IPG’s Ansible Mobile. “Millennial is a logical acquisition given their global scale and fit with AOL's core business.”

“While AOL has tried valiantly to build out a footprint of mobile apps and content, it has very little in terms of mass reach on mobile. In addition, AOL has essentially no mobile app SDK distribution,” commented Eric Bosco, CEO of ChoiceStream. “Millennial Media, on the other hand, has a large publisher network and deep SDK penetration within the app ecosystem, but does not offer advertisers a true programmatic solution. So all in all, it seems like a smart move on the part of AOL who can now integrate this mobile inventory into their programmatic platform.”

Bosco added that he thinks the report “seems to reconfirm the opinion that the Verizon acquisition of AOL was primarily ad-tech focused, not content focused.”

This would not be AOL’s first time buying one of the biggest ad networks on the market. It happened over eight years ago when it absorbed Third Screen Media, which ultimately failed to gain traction inside AOL.

When reached for comment, AOL said: “[We] don’t have anything to share. It’s just rumor and speculation.” Millennial Media did not immediately respond to inquiries regarding the report.

However, a former Millennial Media executive told Real-Time Daily that the mobile ad net’s value proposition was “always to be an independent full-stack mobile company to counter the likes of Google and others (including AOL),” but noted that “based on the performance of Millennial Media over the last several quarters, it’s not surprising that an exit might be the only option at this point.”

ad exchange, ad network, ad technology, aol, digital, m&a, mobile, programmatic

2 comments about "Verizon's AOL Reportedly In Talks To Acquire Millennial Media".

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Seth Ulinski from Epsilon Digital, July 10, 2015 at 10:25 a.m.
While Millennial Media has a handful of capabilities/solutions that could add value to AOL/VZ stack, financial performance does not indicate that the company's shift to a programmatic model is taking hold. The mobile app SDK piece is interesting, but I think Nexage carries just as much weight being a mobile SSP / Exchange.
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Henry Blaufox from Dragon360, July 10, 2015 at 11:29 a.m.

Assuming this report is correct, it appears to be a classic example of business maturity cycles in technology. For the large firm (AOL) wanting to expand capabilities to keep up with the marketplace, it is buy vs. build. AOL seems to find it faster and easier to buy the base technology by acquiring a much smaller firm with the desired niche offering, rather than build from scratch. The small firm in an increasingly crowded field (Millenial) faces the choice tech specialty firms have encountered for decades in all the other verticals - grow by acquiring, be acquired, or wither as differentiation becomes harder to see. This cycle has been the normal evolution in every technology vertical; it is now the turn of ad tech.

Also noteworthy about this item is the increasing recognition in our industry that Verizon/AOL is about the value of technology for future growth, not the AOL content properties. This insight was first recognized and discussed within the Media Post community beginning the very day the deal was reported.