AOL Wants to Be a Player: Acquisition of Millennial is Quest for Mobile Ads, But the Going is Slow
With its acquisition of Millennial Media, AOL made it clear that the company hopes to become a bigger player in the mobile ad marketplace. Could it work? It wouldn't be easy. "According to eMarketer's latest U.S. ad spending forecast, catching rivals Google and Facebook could prove challenging," explains eMarketer. "Google commands 32.9 percent of mobile … Read More
With its acquisition of Millennial Media, AOL made it clear that the company hopes to become a bigger player in the mobile ad marketplace.
Could it work? It wouldn't be easy.
"According to eMarketer's latest U.S. ad spending forecast, catching rivals Google and Facebook could prove challenging," explains eMarketer. "Google commands 32.9 percent of mobile ad revenue in the U.S., or nearly $10.02 billion. Facebook captures 19.4 percent, or nearly $5.9 billion. By contrast, Millennial Media captures 0.3 percent, or $101.2 million."
Let's face it: becoming a player in this marketplace is a hard slog, but the Millennial gambit does add some mojo for going after those mobile display ad dollars.
"To be a serious player in the mobile display ad market, media companies need to offer advertisers scale, robust audience targeting and sophisticated measurement tools," said eMarketer analyst Cathy Boyle. "AOL will gain ground in two of those areas through its purchase of Millennial Media. The acquisition will expand the breadth and depth of the in-app display ad inventory AOL can offer advertisers, which will help those advertisers achieve greater scale. In addition, the publisher will gain the mobile user profile data that Millennial Media has been amassing for years, which will help improve AOL's ability to find and target specific audiences on mobile devices."
Why is it so tough?
Consider this: Google remains the undisputed leader in total U.S. digital ad revenues, grabbing two in five digital ad dollars this year. Then there's Facebook, with 13.2 percent of the total in eMarketer's latest forecast.
"Facebook, Twitter and other smaller players will continue to gain share, eating away nearly 5 percentage points from Google's slice of digital ad revenues between this year and 2017," according to eMarketer.
"As it continues to leverage its unique targeting capabilities, we expect Facebook to increase its share of ad budgets from brands, direct response advertisers and small businesses," said eMarketer analyst Martín Utreras.
In fact, Facebook will take in nearly one in every five mobile ad dollars in the U.S. this year. Mobile will account for 77.0 percent of Facebook's digital ad revenue this year, growing to 85.0 percent in 2017.
In fact, it's Instagram that could eat the share that AOL craves.
"In the coming quarters, we expect Instagram and video ads monetization to keep increasing Facebook's share of the display ad market," said Utreras.
Going after the big guys is never easy. And we agree: "never say never." But this battle is going to be a hard one for AOL, no matter what company it acquires. Unless, of course, it manages to acquire Google or Facebook.
Millennial Media
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