In case you missed it (you didn’t miss it), Verizon made official its bid to buy AOL for $4.4 billion today.
possible new name for Verizon/AOL rebrand: hell
— Charlie Warzel (@cwarzel) May 12, 2015
Har har har. Jokes about CDs and dial-up times aside, this is a big deal. “Experts” and observers alike, however, seem to disagree on why it’s a big deal.
Here are a few takes via ourselves and the people we follow.
1. This is not about content; it’s about advertising
Of course the advertising would have nowhere to live without editorial. But the real value of AOL–to Verizon, at least–lies in its ad platform and its ad placement software.
— Peter Kafka (@pkafka) May 12, 2015
What does this mean to PR? Well, for one, the CEOs of your ad tech clients FINALLY have something to talk about in major publications!
Any tech writer or editor who casts Verizon-AOL as a “content” deal is a failure at their job.
— Chip Bayers (@chipbayers) May 12, 2015
OK, that’s a little harsh. But Mr. Bayers is onto something.
2. …because delivery venues are more valuable than the content that lives on them
Quite a few people pointed out that the price Verizon will (presumably) pay for AOL is very close to the price Facebook offered for Snapchat nearly two years ago.
Think about that: a content empire employing hundreds of writers and ad sales teams is worth about the same as a delivery app that primarily deals in pics of people making funny faces.
Some other numbers from Kia Makarechi of Vanity Fair:
Verizon is paying $4.4B for AOL. At most recent valuations, Uber is worth 9x that, AirBnb 4.5x, Snapchat 3.4x, Pinterest 2.5x, Dropbox 2.3x. — Kia Makarechi (@Kia_Mak) May 12, 2015
— Alexander Basek (@alexanderbasek) May 12, 2015
Those margins may be ridiculously low, but someone will win the ad tech game–and Verizon bets that this someone will be AOL.
3. Still, content also wins
Some say AOL chief Tim Armstrong attributes Verizon’s interest to all the content his company creates: HuffPo, TechCrunch, Engadget, etc.:
AOL CEO on content: “One of the biggest winners out of this deal is going to be the Huffington Post…”, it will end up on more platforms — CNBC Now (@CNBCnow) May 12, 2015
But, As Kara Swisher reported this morning, Verizon isn’t really all that interested in owning The HuffPo–and the details remain a bit sketchy on the “content” front.
4. Mobile, mobile, mobile
The key feature of AOL’s ad tech service is that it is mobile-friendly. From the AOL statement, as shared by Gizmodo:
“If there is one key to our journey to building the largest digital media platform in the world, it is mobile. Mobile will represent 80% of consumers’ media consumption in the coming years and if we are going to lead, we need to lead in mobile.”
It would seem that the media equation of the future will revolve around mobile-friendly advertising technology.
Content won’t have to stretch too far to adjust to its role as a supporting player, though; seen from one angle, newspapers and news broadcasts have always been collections of ads surrounded by original reporting.
So this is really just a natural progression, isn’t it?