U.S. telecom giant Verizon is buying AOL, paying $50 a share in a $4.4 billion deal. AOL is the owner of multiple online-media properties, including The Huffington Post and TechCrunch, but the brand is usually associated with the days of dial-up internet. They are so old-school that still having an AOL email address has been called a status symbol of early-adopter-hood, though more commonly it’s interpreted as a sign that someone is a bit behind the times. Last year, it was reported that more than 2 million people are still paying AOL $20 a month for dial-up. Verizon, for its part, is known for offering the most expensive cellular service in America.
Is this deal best described as a behemoth of the new, mobile internet acquiring an artifact of the old dial-up one? Sort of, but what’s also on the table is AOL’s booming advertising business. Just last week, AOL posted 7 percent growth in revenue in the first quarter of 2015, largely due to its third-party ad division. Additionally, AOL reported growth in search and contextual advertising. Trefis, a company that analyzes stock prices, estimates that AOL’s third-party ad division accounts for more than 40 percent of AOL’s current value.
By acquiring AOL’s technology for online advertising, Verizon is no doubt taking aim at the next battlegrounds of online advertising: mobile and video. (The word platform appears multiple times the press release.) In a statement, Verizon said that the combination of the two companies will create a mobile-first platform for ads—a market that’s been estimated to be as big as $600 billion globally. Though $50 a share and $4.4 billion aren’t particularly huge numbers in these heady days, the leaders of both companies seem eager to bring their trailblazing days back—and Armstrong made clear what that path is for AOL: "If we are going to lead, we need to lead in mobile," he wrote in a memo to his employees.
We want to hear what you think about this article. Submit a letter to the editor or write to email@example.com.