Mobile is big and video is big – and putting the two together presents a gargantuan advertising opportunity that Verizon will be primed to capture if it closes on AOL.
“Verizon has been trying to figure out how to grab a bigger share of the ad tech pie, so the move makes sense strategically on this front, and also from a content perspective,” said David Eastman, partner at the independent digital agency MCD Partners. He noted Verizon is “eager to build a stronger platform.”
While Verizon has floundered in the ad tech arena (remember its Zombie cookie screw up?), AOL has flourished thanks in part to its August 2013 acquisition of video platform Adap.tv. And AOL has since made consistent investments in both video and mobile.
AOL chief Tim Armstrong noted in an internal email announcing the acquisition, published by TechCrunch, that mobile is the “one key to our journey to building the largest digital media platform in the world.”
And Tremor Video CEO Bill Day speculated that Verizon was probably shocked at mobile video’s growth spurt.
Nielsen estimates that 122 million people per month consumed video on their smartphones in Q4 2014, compared to 102 million during the same period in 2013. And comScore’s MobiLens survey found the percentage of Americans ages 13 and older who choose to watch TV or video on their mobile phone grew from 31.9% in March 2014 to 36.4% in March of this year.
As consumers increasingly consume video on mobile, the ad dollars will follow.
And, according to the IAB, 68% of marketers and agencies plan to increase their video ad spend in the next year.
Verizon, Day pointed out, bought AOL because it needs to figure out how mobile advertising works.
“I think Verizon doesn’t know anything about that,” he said. “AOL brings a lot of competency in terms of how to make that advertising environment work within mobile video.”
Verizon isn’t the only company recognizing video’s increasing importance. After all, Yahoo bought BrightRoll, Facebook bought LiveRail and Australian telco Telstra bought Ooyala.
“Verizon has opened up a huge potential revenue stream with this acquisition,” said Patrick Hopf, president of SourceKnowledge, a programmatic video platform. “Mobile is a great medium for video, since ads are often full-screen, and it's great for programmatic, as there's an abundance of data available from these devices, ranging from device ID to location and integration of payments."