AOL’s $248M offer for Millennial expected to boost Verizon’s Go90 service
AOL, which was recently acquired by Verizon Communications for $4.4 billion, signed an agreement to acquire mobile advertising platform provider Millennial Media for approximately $248 million.
AOL said the acquisition, if approved, will strengthen its mobile capabilities and “underlines its position as the first global mobile media technology company.” The deal had been rumored earlier this year, with estimates of a total value in excess of $300 million.
“AOL is well positioned as consumers spend more and more time on mobile devices, and as advertisers, agencies and publishers become more reliant on programmatic monetization tools,” said Bob Lord, president at AOL. “As we continue to invest in our platforms and technology, the acquisition of Millennial Media accelerates our competitive mobile offering in One by AOL and enhances our current publisher offering with an ‘all in’ monetization platform for app developers.”
AOL explained that Millennial’s assets include more than 65,000 applications it plans to add to its supply-side platform for app monetization; “significant” mobile brand advertising scale to One by AOL; access to approximately 1 billion global active unique users and cross-screen targeting capabilities; accelerate AOL’s mobile position in international markets; and include Millennial’s mobile focused sales and product team.
Last year, VentureBeat reported U.S. advertising firms and marketers would spend about $1.5 billion on mobile video ads by the end of 2014, more than double the $722 million spent in 2013. David Hallerman, EMarketer principal analyst, told VentureBeat that mobile video ads accounted for nearly 19% of all digital-video ad spending in 2013. He predicted that figure would climb to nearly 26% by the end of 2014 and quadruple to more than $6 billion by 2018 for “huge growth.”
Millennial is currently headquartered in Baltimore, with offices across the U.S., in Germany, the U.K., France, Singapore and Japan. The deal is expected to close this fall.
AOL in late June struck a deal with Microsoft to assume management and sales responsibility for Microsoft’s display, mobile and video advertising inventory in nine markets. The deal covers the United States, the United Kingdom, Canada, Brazil, France, Germany, Italy, Spain and Japan, with AOL tasked with representing inventory from across Microsoft’s suite of online brands, including MSN Homepage and verticals; Outlook Mail; Xbox; Skype and ads in apps. The deal also includes a 10-year global search and search advertising component that will see AOL rely on Microsoft’s Bing search engine beginning next year.
Verizon closed on the AOL deal in June, in a move that added AOL’s digital content expertise to Verizon’s portfolio, which the telecom operator stated would boost its LTE wireless video business, its “over-the-top” video offerings and create “a growth platform from wireless to [‘Internet of Things’] for consumers and businesses.” AOL also controls a number of content brands including Huffington Post, Engadget, TechCrunch and Makers.
Verizon noted its digital media services business is designed to help companies “prepare, deliver and display digital media content including video, Web pages, applications, mobile ads and live events on any screen.” Verizon last year bought Intel Media for Internet video technology, content delivery network EdgeCast Networks and live video encoder UpLynk.
Analysts noted the AOL acquisition of Millennial Media could strengthen Verizon’s planned launch of a mobile-first video platform expected to take the Go90 brand name.
“Go90 … will initially be offered as a free service supported by advertising revenue featuring short-form content aimed at millennial customers,” said Jennifer Fritzsche, senior analyst at Wells Fargo Securities. “This acquisition will help [Verizon] monetize its upcoming OTT offering by enhancing its advertising scale and programmatic ad capabilities.”
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