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Verizon Purchases AOL: Why this Matters

verizon purchases aol

Big news out of the media/tech world with Verizon announcing it will purchase AOL for $4.4 billion. For many who may not follow the media world closely, this may seem like a strange decision (hence, the jokes on Twitter about Verizon service coming soon to a CD-ROM near you).

However, AOL is not the ugly stepsister of the digital media space. Tim Armstrong, their CEO, has placed enormous focus on building up their programmatic and video advertising capabilities with a number of technology and start-up purchases over the past few years. In addition, they are leaders in digital original programming and own well-respected news and lifestyle brands like the Huffington Post, Tech Crunch and StyleList. Long story short, AOL is quite the powerhouse in the digital media space.

Why does this acquisition matter?

  • Big Data with Big Implications Just recently, the media world was buzzing over the announcement that Cablevision and ESPN/Disney would be syncing their data. The idea of an AOL/Verizon combination makes those data and insight possibilities pale in comparison. With the scale AOL has on their advertising platform (mostly outside of their owned and operated properties) and the information Verizon has at their fingertips about their mobile, DSL, and TV subscribers, the targetability of media through their platform should be best-in-class once they figure out all of the logistics.
  • Colliding of Worlds It will be interesting to see if this move and the earlier Comcast/NBC Universal merger lead to more telecommunication service providers starting to shop for content companies and creating end-to-end solutions — from the content you want to view to the method you use to get to that content.

Why is this a good move?

While AOL has done a great job rebuilding its business, they are in a better position as a powerful tool within a bigger puzzle. Being part of Verizon will give AOL the coverage and the capital it needs to continually invest and upgrade its technology and capabilities to reflect a changing media world.

For Verizon, it’s an opportunity to get their hands on best-in-class advertising and video technology that AOL has acquired over the past few years. AOL has built one of the, if not the, strongest video advertising platforms in the industry. If digital video is truly the future, AOL, and now Verizon, are positioned to play a big role in the new marketing mix.

Most importantly, combining the two companies’ data into AOL’s technology platforms will make Verizon a powerful partner in the digital marketing space — rivaling Google and Facebook.

What does this mean for marketers?

Today, very little. This deal won’t be approved until the summer, so we’ll all sit tight until then. In the future, we at EMA will watch closely to see how AOL evolves their advertising product under the Verizon umbrella and how the power of the two companies’ combined data creates more scalable and accurate targeting capabilities.