AOL bids to exploit shift in viewing patterns

AOL, the company that made famous the phrase "you've got mail", was the subject of a $4.4 billion bid by telecoms giant Verizon this week, and the proposed acquisition has had AOL head of international Graham Moysey celebrating.

“My wife and I had a nice little bottle of wine last night, I’m not going to lie to you,” he told the IAB Video Connect conference in Dublin.

“It’s still early days, but I think the sentiment throughout the organisation is really good,” said Mr Moysey, a London-based Canadian who oversees all of AOL’s international businesses.

“There will be a consolidation of players over the next few years, so this is a good strategic move for us,” he said, professing to be excited by the access to customer data that the deal could deliver to AOL.

AOL dominated the dial-up internet market in the US in the 1990s and still collects an astonishing $600 million from these old connections, but its focus today has moved on to both original content and advertising technologies.

Verizon, the largest telecoms group in the US with 100 million mobile customers, has been drawn to AOL by its advertising platform, which allows it to embed targeted ads into both its own video content and that of third-party content providers. The online video advertising market is forecast to explode and the name of the game is to stop Google's YouTube from winning all the spoils.

In preparation, AOLbought Adap.TV for $405 million last year, while Yahoo picked up programmatic video ad company BrightRoll for $640 million, and Facebook, Comcast and Google itself also spent big money in the area.

About 180 of AOL’s 200 employees in Dublin are engineers who have worked on developing platforms such as One, AOL’s latest so-called “programmatic” advertising platform, which lets brands target their ads at highly specific audiences across all screens, including television, using automated, data-driven methods.

Programmatic ad technology, now common in the digital display ad market, has begun to reshape how video-on-demand services work and may ultimately change the television business.

AOL’s Adap.TV already has a deal with Multi Channel Network (MCN) to pilot an automated marketplace for buying ads on linear pay-TV channels in Australia, while in the UK, Sky recently launched a programmatic trading platform called AdSmart, which means different viewers are served different ads.

“The consumer drives all behaviour. The consumer is judge and jury,” said Mr Moysey. “Younger audiences’ usage of TV is declining and their usage of video-on-demand is increasing. That’s the end of that sentence.”