AOL buys Millennial Media to go deeper into mobile ads

Steven Loeb · September 3, 2015 · Short URL:

This is AOL's third acquisition in two weeks, after buying Ashe Avenue and Kanvas Labs

When AOL was bought by Verizon for $44 billion earlier this year, the conventional wisdom was that Verizon wanted to get its hands on AOL's video and advertising platform, which the company has built up in the years since its disastrous merger with Time Warner ended. 

Now we have confirmation that that was the case, as AOL announced on Thursday that it has signed an agreement to buy mobile ad network Millennial Media to expand its reach into mobile. AOL will be paying $1.75 per share for common stock of the publicly traded company, and AOL has confirmed to VatorNews that the price of the acquisition was $238 million. 

The transaction will take the form of a tender offer followed by a merger, with Millennial Media becoming a wholly owned subsidiary of AOL when the deal is completed, which is expected to happen in the Fall of this year.

Founded in 2006, Millennial Media is an independent mobile ad marketplace that drives monetization for its publisher and developer partners by connecting them to networks, advertisers and an RTB exchange. 

It currently serves 700 million monthly unique global users to over 65,000 apps and websites.

In its most recent quarterly earnings, Millennial Media saw revenue of $65.8 million, compared to $67.3 million in the second quarter of 2014. Net loss was $15.5 million, compared to net loss of $15.1 million in the year ago period.

Through this acquisition, AOL says that it will add a leading supply-side platform for app monetization, as well as a "significant mobile brand advertising scale across ONE by AOL."

It will also give AOL access to approximately 1 billion global active unique users and robust addressable and cross-screen targeting capabilities, and accelerate its mobile position in key international markets, including Singapore, Japan, UK, France and Germany.

I asked AOL if it planned to retain all of Millennial Media's employees, but the company would not comment at this time. 

"As is customary with acquisitions, we cannot comment on expected changes, if any, to their business or operations until the deal officially closes, which we expect to happen this fall," an AOL spokesperson told me. 

Programmatic buying allows advertisers to use software to buy and sell digital media, in real time, which gives them much more control over where, and how, their ads run. It’s easy to see why publishers would like this: they want their ads getting to the right people at the right time.

This is becoming big business, with 69% of mobile ad spend expected to be bought and sold programmatically, equally more than $14 billion, with programmatic video expected to reach $4 billion by 2016, according to eMarketer.

After its disastrous merger with Time Warner came to an end in 2009, 

AOL has shifted its focus, turning itself into a major player as a video and advertising platform. The company purchased video advertising platform for $405 million in 2013, which was one of AOL's largest acquisitions ever, even more than the $315 million it paid for the Huffington Post in 2011, but it paid off, leading the company to see double digit ad growth for the first time since 2008.

The company also purchased video management and exchange platform Vidible at the end of 2014.

Since its acquisition by Verizon was completed in June, AOL has been on a little bit of an acquisition streak. This is its third acquisition in the last two weeks. 

Last week the company bought Web development group Ashe Avenue, and earlier this week itannounced the purchase of mobile app developer Kanvas Labs.

VatorNews has reached out to AOL for confirmation of the purchase price. We will update this story if we learn more. 

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