Verizon To Acquire AOL For $ 4.4 Billion To Dominate Mobile Advertising

Verizon To Acquire AOL For $ 4.4 Billion To Dominate Mobile Advertising


The mobile advertising market is about to face a big boom! Verizon Communications is set to acquire AOL Media at a grand worth of US$ 4.4 Billion and going to make the biggest U.S. wireless carrier into world’s leading provider of content and video for the web and mobile phones.

This is going to intensify things as the battle for mobile advertising and digital media is going to get more fierce. So what is the deal behind these two big media giants that is bringing them together. Let’s analyze!

As a wireless provider, Verizon is the largest service of its kind in the U.S. On the other hand, AOL stands tall with the superior in-house technology of powering exclusive videos and automated targeting of ads to the mobile devices.

With the help of AOL, Verizon will now be able to extend the stretch of its services. The onset of Verizon’s Mobile Streaming Service, which will commence during Summer season would feature live TV, concept based reality shows, and pay-per-view system. The association between the two giants will definitely support the purpose!


Verizon’s Bet On This Acquisition

The world around Verizon Communications has been competitive for quite a while! Needless to say, the competition is stiff, especially in the wake of brands like T-Mobile US Inc. that stands as a tough challenger in front of the company. Can this acquisition help Verizon Communications to compete against two biggest online advertising giants named Google and Facebook? Hopefully, the news is good for Verizon Communications!

Verizon Communications is planning to release the mobile video streaming service in the coming month (by the end of June). It is notable that AOL’s technology will provide an upper hand in drafting this video streaming service.

According to Roger Entner, the analyst for Recon Analytics, the idea behind this acquisition is to integrate the advertising functions with the content programming (that will be ultimately powered by the wireless network). He declared the plan ‘ambitious’- a certain dramatic move taken to overtake the dominance of Google.

The Acquisition – Facts You Cannot Miss!

With this acquisition, AOL and its digital properties, including Huffington Post, TechCrunch and Engadget websites, would become part of  Verizon, however AOL CEO Tim Armstrong will be staying in his role. In fact, the AOL Chief is expected to net nearly $180 million from the deal from the $50-per-share Verizon that offer represents a premium of 17.4 percent to AOL’s Monday close. With 6.7% ownership of the company, it makes Armstrong the largest individual shareholder.

AOL Chief Executive Officer, Tim Armstrong

Armstrong, who has been trying to build up AOL’s expertise in mobile advertising technology, sees mobile representing 80 percent of media consumption in coming years.

Verizon has over 100 million mobile consumers, content deals with the likes of the National Football League and a meaningful strategy in mobile video.. And if we are going to lead, we need to lead in mobile.  – AOL CEO Armstrong in a memo to his employees

Total Acquisition worth US$ 4.4 Billion
The payment procedure- Verizon Communications will pay an amount of $50 per share and a 17 percent premium over AOL’s estimate stock price by Monday evening.
Who will lead the operations for AOL? The ongoing CEO for AOL, Tim Armstrong, will continue to lead the work operations for AOL.
A word about the shares of AOL: AOL’s shares witnessed a 19 percent hike in the rate that landed them to $50.52.

The rate is superior to what Verizon Communications has offered in the deal!

Verizon Communications share’s were dropped at the rate of 0.4 percent to $49.62.

The nature of the Service- The service resulted from the acquisition will provide a mixed support of paid, free and ad-supported content.

The idea is not to replicate the traditional TV.

The service will feature short duration snippets- rather than anything as long as a complete 30 minute show.

The motto behind the acquisition:


To provide premium digital experience to user.

As per the press release provided by Verizon Communications, the acquisition will help the company’s idea of awarding a cross-screen connection for costumers, creators and advertisers.

Story behind the AOL Journey

The journey of steady ups and down has always kept AOL motivated! Right from the beginning (about 15 years back when AOL came into news for merging with Time Warner Inc.), AOL has bravely faced the test of time.

When it started, AOL was one among the world’s largest deal, and when it proceeded further, it was also a terrible failure. AOL had seen the time of failure- a time when their shares went sinking deep!

However, the time of glory was in the company’s fate. The time came when under the leadership of Armstrong, AOL bought the most acknowledged sites like Huffington Post, TechCrunch, MapQuest and Moviefone and expanded their reign in mobile content.

AOL’s shares went up after the news of Verizon acquisition

With this latest development, AOL will work as a subdivision of Verizon Communications. According to Armstrong, the purpose of this deal is to oversee the current assets of AOL, and also to analyze the additional assets derived from Verizon in order to target the mobile cum video media space.

The deal will certainly add scale and vision to the every exercise done under the name of AOL- be it content, video, advertising strategy and so on.

Background About Verizon Communications

The wireless market in the U.S is saturation! Managing intense competition and customer base of 100 million wireless users, Verizon Communications is proceeding towards the heights of quality and versatility in service.

What particular differs Verizon Communications from the rest of the competitive lot is their desire for ‘newness’ in service. Mobile video-streaming service planned by Verizon Communications will be a defining edge in the wireless market- it will boost users subscription and number of packages that are targeted to the American audience.

What The Acquisition May Do:

Mobile Industry is every changing, and thanks to the acquisition deals between Verizon and AOL that is promising new heights. Since beginning, the focus of AOL technology has been on the approach of ‘programmatic advertising’- an automated marketplace where advertisements are found, and they are inserted in a flash.

The audience using mobile technology is diverse- needless to say, people nowadays are more interested in watching videos on their personal mobile devices. Don’t you think Verizon Communications has discovered an amazing strategy for competing with Google and Facebook ad network?

It’s been a while since Verizon has been working as a video-streaming system! Meanwhile, they have also acquired the leading video technology companies in their journey to success- companies like upLynk, EdgeCast and OnCue are already working under Verizon Communications.

Verizon’s latest call with AOL is the largest attempt of pushing Mobile video in an all new revenue generation strategy. Being the early birds of mobile advertising technology, Verizon is leading the use of mobile video-streaming. Hopefully, they are on the right track and vision! hopes for the best digital experience due to this deal!