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Verizon to Boost Advertising Programs with AOL Technology

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U.S. telecom behemoth Verizon Communications Inc. (VZ - Free Report) has decided to merge its existing advertising programs, Relevant Mobile Advertising and Verizon Selects, with AOL Advertising Network, effective Nov 2015.

Verizon’s existing ad programs collect personal data related to its users, which the company will now share with its subsidiary AOL. The combination of these two ad technologies will provide valuable information to advertisers and allow them to effectively post their advertisements on AOL’s web sites and most importantly through Verizon’s latest Go90 mobile video service.

In Jun 2015, Verizon took over AOL Inc. for $4.4 billion. The acquisition of AOL not only expands Verizon’s mobile-video offerings, but also provides an access to its state-of-the-art advertising technology which enables automated buying and selling of ads online. At present, AOL is developing an innovative automated technology that will enable advertisers to find video publishers who will help them reach the targeted audience.

In Apr 2015, AOL had launched a fresh ad platform named One. This platform allows advertisers to bid for space on online social networking sites such as Facebook Inc. (FB - Free Report) and Twitter Inc. (TWTR - Free Report) . It also tracks ads and helps advertisers purchase valuable ad time.

More recently, in September, Verizon announced that AOL has decided to acquire Baltimore-based mobile advertising company, Millennial Media Inc. . With this, Verizon is set to become a formidable challenger to giants like Google Inc. (GOOGL - Free Report) and Facebook in the mobile video advertising space.

Mobile video advertising is gradually shifting from the simple selling of banner ads on the mobile Web to automated or programmatic ad selling. Millennial Media is a leading company that sells mobile ads across numerous websites and applications. Its advertising platform is designed to monetize applications for publishers and developers through the use of data-driven ad targeting.

Post-acquisition, Millennial’s targeted ad technology, along with AOL’s online content and consumer data platform, will be integrated into Verizon’s massive subscriber base to provide a powerful targeted mobile ad platform to advertisers. Millennial’s targeted ad platform, combined with substantial data from Verizon, will help AOL improve the targeted ad business for mobile and desktop website publishers.

The Bottom Line

Verizon is currently focusing on online content delivery, mobile video and online advertising for future growth. These businesses have the potential to generate significant revenues for the company given that its legacy telecom business is presently facing serious pricing competition. Acquisition of AOL and Millennial Media will enable the company to sell digital media services to large companies and social media firms by monetizing its massive wireless customer base.

Verizon currently carries a Zacks Rank #3 (Hold).

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