GOSSIP: Here's what the ad industry thinks of Tim Armstrong selling AOL for $4.4 billion to Verizon

145018451Getty Images/Paul ZimmermanAOL CEO Tim Armstrong.

Verizon’s move to acquire AOL for $US4.4 billion is all anyone in the advertising industry is talking about right now.

It’s huge, not just in terms of price, but what it means for the online advertising landscape.

Tim Armstrong, AOL’s CEO, said last week the company was “building toward being one of the top three” next to Google and Facebook in online advertising. It still has a long way to go — AOL is currently at number 11 — according to eMarketer estimates — but Verizon should give AOL some of the scale, data, and tech needed to ramp up its online advertising business.

We asked around to see what the industry was chatting about in terms of the deal, and how they feel Verizon/AOL is going to affect them. Bear in mind this is gossip, sometimes coming from competitors and others who have no reason to feel charitable toward either company.

“[This puts AOL] on a comparable footing to Facebook and Google” — Ari Paparo, an ad tech veteran who previously worked for Google’s DoubleClick and is now the CEO of pre-launch ad tech start-up Beeswax

“From an ad tech perspective, this takes AOL’s strong presence in the market, and boosts it significantly with Verizon data. If the future of digital ads is mostly about video viewed on mobile devices, the overlay of Verizon household data is a very big differentiator which puts them on comparable footing to Facebook and Google in the ability to deliver what advertisers want with minimal waste.

“Verizon says they ‘touch’ 75% of internet traffic, but they have struggled to add value to the traffic through ad targeting with their so-called zombie/super cookies. There’s much less controversy around using user data if they use it themselves rather than pass it to various ad tech third parties.”

“Laughable”  — A former AOL ad sales exec, who referenced the company’s recent ad sales layoffs (in which it axed around 150 roles as the company shifted towards programmatic advertising.)

“WOW. It’s clear now why they got rid of the best (and most expensive talent) back in January. The memo Tim Armstrong sent this morning was almost laughable. ‘Current employees will be compensated the same or better’?! Doubtful. I’m sure they will sell off the content brands and in a year lay off everyone else. The duplication of sales force will be shameful.”

“I wonder how much Shingy will get? What really burns me is the fact that TA was SO adamant about being transparent and was emphatic when it came to denying these Verizon rumours in January.”

“Doesn’t surprise me at all” — Eric Franchi, co-founder and chief evangelist at independent ad tech company Undertone.

This acquisition didn’t surprise me at all. There are many large companies that need ad tech assets to compete, let alone thrive, in the future that is digital-first and multiscreen. Expect to see more deals like it.

I don’t think that it dramatically changes the face of the ad tech landscape, at least over the short term. The distance between Facebook and Google and the rest is significant.I think the big opportunity here is in digital video, based on Verizon’s cable assets.

Franchi also tweeted:

“This is only a first step to make a real claim on the mobile video market” — Stephen Upstone, CEO and founder of LoopMe, a video ad tech startup, and UK chairman of the Mobile Marketing Association. 

TV brand advertising is a $US200bn market and we believe that up to 50% of this revenue will move to digital video over the next 5 years. AOL has good online video capabilities today, but does not have a strong mobile video capability yet. Given that most of digital will move to mobile and tablet over the next 5 years this is only a first step to make a real claim on the mobile video market against Google and Facebook. 

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