This morning AOL announced that it was buying mobile ad platform Millennial Media for roughly $240 million. A deal had been rumored for the past couple of months as Millennial has struggled as a public company.
In addition to solving problems for Millennial the deal gives the Verizon-owned AOL greater programmatic reach into mobile. More broadly it puts Verizon squarely in the mobile-advertising business, something the company was unable to achieve on its own prior to the AOL acquisition.
According to the press release, AOL achieves the following benefits from the deal:
- A leading supply-side platform for app monetization with over 65,000 apps to its publisher suite of offerings
- A significant mobile brand advertising scale across ONE by AOL
- Access to approximately 1 billion global active unique users and robust addressable and cross-screen targeting capabilities
- [An enhanced] mobile position in key international markets, including Singapore, Japan, UK, France and Germany
- World-class engineering, sales and product talent that specialize in mobile to AOL
Data aggregator and forecaster eMarketer has reported that mobile ad spending will surpass the PC this year, reaching just over $30 billion while desktop ad spending will be just under $28 billion. The firm argues desktop ad spending “peaked” in 2013.
Mobile ad revenues are much more concentrated than desktop ad spending. Indeed global mobile ad revenues are dominated by six or seven US-based companies, including Google, Facebook, Twitter, Yahoo, AOL (now) and a couple of others. Mobile ad revenue is projected to capture more than two-thirds of all digital ad spending within four years.
The Millennial deal is expected to close this fall. As is often the case the acquisition could trigger additional buying or consolidation as major networks and platforms attempt to compete to achieve greater scale or reach and smaller platforms put themselves into contention.
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