If you are like most people, you haven’t given a ton of thought to AOL in recent years. Perhaps you’re even old enough to have received those many, many shiny disks in the mail offering 100 free minutes of surfing on AmericaOnline.
Since its meteoric rise during the dot-com years, and subsequent fall, the company has been in search of a steady strategy to keep it going as its dial-up Internet business fades. Well, AOL apparently found something that somebody liked. In May, Verizon bought AOL for more than $4 billion.
Why exactly did Verizon go for AOL? Opinions vary. Some say the mobile phone company wanted AOL’s video streaming capability. Others said it was all about data and mobile, and still others, content. In a sense, they’re all right. At the heart of the Verizon deal, in my opinion, is a technology AOL developed for programmatic advertising, which is already shaping up to be a big piece of the future of all three.
If you’re not in the ad game (and you’re probably not), programmatic advertising is a system that allows a company to automate the process of selecting when and where to purchase an ad spot based on its costs and potential reach. Digiday defines programmatic ad buying as “the use of software to purchase digital advertising, as opposed to the traditional process that involves…human negotiations and manual insertion orders. It’s using machines to buy ads, basically.”
In some cases, these systems include a real-time bidding component that optimizes prices and timing for the buying and selling process.
What makes programmatic buying and real-time bidding attractive, of course, is the wealth of data signals that now exist which marketers can use to drive decisions and target audiences. And, naturally, it’s far easier to measure the impact and efficiency of that buying after the fact.
With consumers now getting their media across a range of screens and platforms, often at the same time, it’s become complex for a human ad buyer to figure out how to best reach them.
Enter programmatic advertising. Using that rich data and coupling it with rapid, sophisticated analysis, it allows ad buyers to select parameters of who they want to reach along, say, a hashtag or geography, and then simply let the system run. The Interactive Advertising Bureau’s Programmatic Council now estimates that: “Approximately 20% of all digital advertising is sold by one machine talking to another machine—and growing rapidly.”
AOL’s Programmatic Platform
So how did AOL end up in the middle of all this? A couple of years ago, it launched a programmatic advertising platform, and by last year, it was starting to turn a lot of heads. Analysts started giving the company a second look.
“AOL ad-tech and video (platforms) revenue grew 44% over the past year, driving an 18% increase in the company’s overall ad revenue, according to its third-quarter earnings report released today,” noted AdAge last November.
More recently, AOL relaunched its programmatic advertising, which included many versions attached to different parts of the company’s media offerings, as a single programmatic platform called One by AOL. Rather than having many exchanges for different parts of the company’s offerings, users can now use a single automated ad-buying platform to place their ads across as many or as few content channels and devices as they want.
With video, particularly mobile video, exploding, that’s a significant amount of ad-buying muscle. And it’s been good news for AOL, which recently said revenue from programmatic advertising surged 80% in the first quarter of 2015.
Now with AOL becoming a part of Verizon, we can expect the reach of these ad platforms to expand even further. Not bad for a company that just about everyone who had given up on.
Image credit: Travis Wise