Despite the seemingly daily rise of new contenders from
Success, by their measure, would be a force potent enough to offer a serious alternative to Google and Facebook for reaching large target audiences online. And on paper, at least, the combination of a telco that boasts 100 million customers and lots of data about each one with an Internet pioneer that has a credible way to serve ads to them--especially lucrative video ads to their smartphones--looks like a winner.
"It's fantastic news to that we have companies besides Google and Facebook in this space," says Andrew Bloom, senior VP of strategic business development for Sizmek, which helps advertisers and ad agencies run online ad campaigns. The data that's at the heart of the deal, he says, is "arguably as powerful as Google's or Facebook's."
The prospect of a foil to Google's and Facebook's ad systems also appeals to Harvin Furman, senior VP in charge of combining TV and online ad campaigns for agency Starcom MediaVest Group. He spies an opportunity for Verizon to use AOL's automated "programmatic" ad technology to reach people wherever they're viewing content, whether it's on their smartphone, their tablet, their computer or their TV set. "It's gives us the potential to lean into a programmatic solution to TV," he says--that is, a way to target people as precisely on television as online.
Notwithstanding rumors earlier this year of a Verizon-AOL deal, the acquisition surprised many ad folks. Scott Rosenblum, CEO and founder of Neutrino Media Group, a boutique ad technology and consulting firm for publishers, figured Yahoo was the more likely suitor. "But if they pull it off, it could be impactful," he says, thanks to their complementary distribution and content assets.
For all that, the combination faces a raft of obstacles. For one, closing the deal and then integrating each company's technologies could take a long time. "Twenty-four months would be pretty quick," says Neutrino Chief Technology Officer Abhi Goel. "There's a huge software integration project."
There's also a huge corporate culture challenge. Even a $4.4 billion deal is a relatively small one for Verizon, says Rosenblum, and that means that AOL may have trouble getting attention and extracting corporate resources from a huge bureaucracy.
More than that, says Bloom, the culture shock will be fearsome. AOL is no spring chicken, but Verizon is the phone company--traditionally as slow-moving a business as it comes. "This is night and day," he says. As a result, executing the ambitious plans will be "a massive question mark."
Even if things go more or less right, the combination will give Google, Facebook, and that pack of upstarts a two-year window to keep chugging ahead on their much clearer and more proven strategic plans. As much as advertisers and agencies want to see the deal work, they're not going to bet their budgets on a promise. They may even hold back spending on AOL until they see more specific plans and, ultimately, results.
Meantime, the still more entrepreneurial AOL likely will see an exodus of talent, both in engineering and in content production, given that Huffington Post and other AOL properties are at least in the shadow of a potential spinoff. "People don't want to work for the phone company," says Eric Bosco, a former AOL ad executive who's now CEO of ad targeting firm ChoiceStream.
The upshot, he says: "The road to where a Verizon-AOL combination gets in the league of Google or Facebook is long indeed."
