AOL has announced that it is buying Millennial Media–a publicly traded mobile ad company that was valued at $2 billion in its 2012 IPO, but has fallen to less than $300 million. AOL will be paying $1.75/share; that comes to an enterprise value of $238 million after accounting for debt.
What’s in it for AOL?
“A strong ad tech stack is a strategic imperative for AOL, both as an alternative to Doubleclick and a way to better monetize their owned and operated inventory,” Metamarkets CEO Mike Driscoll (pictured top left) tells Adotas. “AOL shored up their programmatic video footprint with Adapt, so it makes sense they’d want to do the same in programmatic mobile with Millennial — a much stronger business than the stock market gives it credit for. Though all these moves likely predate the Verizon acquisition, there’s no question that the strategy is enhanced by the possibility of tapping into Verizon’s walled garden of consumer data for ad targeting purposes.”
The Verizon POV
Driscoll also points out that the richest social networks on earth don’t belong to Facebook or Twitter, they belong to telcos like Verizon: “With the acquisition of Millennial Media, AOL can better unlock the value of Verizon’s vibrant customer network in its most natural medium: mobile.”
This acquisition follows in the footsteps of previous telco-led acquisitions of advertising technology firms (SingTel’s buying of Amobee in 2013, Telstra’s buying of Ooyala in 2014) and hints at more such M&A activity in the future. It will be interesting to see how it all unfolds in the coming months and years.