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New thinking, new technology for the creative sectors
A MediaTainment Finance supplement

Could AOL Inc. and Yahoo Inc. end up merging under Verizon Communications, the telecoms behemoth that currently owns the former?

Because it is make or break time for AOL Inc. and Yahoo Inc., the two pioneering US-based Web portals that started in the 1990s and were, arguably, the foundations of social media.

But their focus on content and advertising technology in recent years appears to have boosted the fortunes of the former and could precipitate the latter’s decline, if their respective current state of affairs persists.

Speaking at the most recent edition of tech industry event TechCrunch Disrupt London, AOL Inc.’s CEO Tim Armstrong (pictured) recounted the benefits of last year’s US$4.4bn sale of his company to Verizon.

He reassured attendees at TechCrunch Disrupt (which happens to be part of the AOL international empire) that the company’s tech-centric ambitions would not end with the new owner.

“We’re focusing on AOL,” declared Armstrong, who is AOL’s biggest individual shareholder with a 6.7% stake. “In the deals we’ve done, AOL has moved on from investing in content and video. But we’ve stayed focused on what our core strategy is. I did the Verizon deal because it will mean AOL becomes a more important (tech) company than it is today.”

Ad tech acquisitions
The way digital ads are delivered online, on mobile and on social media videos is changing radically. And so are the ways consumers respond to them.

Among AOL’s heavy-duty pre-Verizon investments is a series of advertising tech purchases.

It paid US$405m for video advertising platform in 2013. In 2014, it bought native advertising specialist Gravity for US$9.7m, followed by digital ads analytics firm Convertro (US$101m), video ads exchange platform Vidible (US$50m) and TV audience targeting service PrecisionDemand.

As digital ad blocking becomes a bone of contention in media, he warned about the challenges ahead.

“The page view is structurally flawed for measuring the (online) media business as well as the advertising space. Content and advertising spaces are ripe for disruption,” he said. “Consumers are crying out for that disruption. The monetization of advertising is poorly done right now, but it is the most important space in the world. So if we do it well, it would offer a huge business opportunity.”

AOL rises; Yahoo tumbles
Like Armstrong, embattled Yahoo’s CEO Marissa Mayer (pictured) is a former senior executive from Google, the search engine behemoth now known as Alphabet Inc.

But since taking over Yahoo’s helm in 2012, Mayer has not been able to steer and steady Yahoo’s still shaky ship.

To continue reading this article on AOL and Yahoo, two ad tech behemoths, and the state of their respective businesses in advertising, download TechMutiny Issue No.12


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