AOL to make video advertising as ‘easy’ as e-commerce with acquisition

7 Aug 2013

Tim Armstrong, chairman and CEO, AOL, and Amir Ashkenazi, CEO,, in New York. Photo by Gino DePinto

From New York, AOL’s chief whip Tim Armstrong has revealed that AOL has entered into an agreement to splash out US$405m in cash and stocks to snap up – the programmatic video advertising platform for brands, agencies and publishers. AOL believes the acquisition of the start-up – its biggest ever – will help the internet giant plot an aggressive mission to take a global lead in premium and programmatic video advertising. The news came as AOL announced its earnings for the second quarter of 2013.

The purchase of is set to be AOL’s largest acquisition ever to happen. In 2011, AOL acquired The Huffington Post for €315m in cash.

Today’s news was greeted with intrigue by the investor and tech media community. That’s because AOL’s deal with comes after the video-platform start-up seemingly filed with the US Securities and Exchange Commission (SEC) to go public earlier this year.

According to a report on AllThingsD, the reason that there is no evidence of Adap.TV filing with the SEC in 2013 for an intended IPO is because companies can now opt to do so confidentially when filing to go public. This is as a result of the new JOBS Act in the US, apparently.

Q2 financial results – AOL

But moving away from Adap.TV, for a moment, and turning to AOL’s Q2 earnings report.

Today, the company revealed that it had superseded Wall Street expectations for the second quarter: AOL’s revenue for the quarter was US$541m, a 2pc hike from the same quarter last year.

AOL’s net income was US$28.5m. It indicated, however, that its Q2 2013 operating income, net income and EPS comparability was impacted by its US$1bn patent sale with Microsoft in Q2 2012.

Armstrong said that AOL continued to get “leaner” during the second quarter of 2013. He said that AOL managed to grow both consumer traffic and all advertising revenue lines, as well as improving its subscription trends.

According to AOL Q2 total revenue grew 2pc year-over-year driven by global advertising revenue growth.

The company said that global advertising revenue grew 7pc year-over-year. It said this reflected a 5pc growth in global display revenue reflects 3pc and 19pc growth in domestic and international display revenue, respectively. This, it said, was driven by increased reserved impressions sold on AOL Properties.

So, how will fit into the AOL mix?

It appears that will operate independently as part of AOL’s video organisation, which is led by Ran Harnevo, senior vice-president.

Once the acquisition is completed (most likely in the third quarter of 2013), the platform will slot into AOL Networks’ offering to its publisher and advertiser partners. AOL Networks’ brands include, The AOL On Network, Be On, ADTECH and Pictela.

Forking out US$405m

The purchase price AOL will pay to take under its wing will total US$405m in aggregate and will be comprised of around US$322m in cash consideration, and circa US$83m in AOL common stock – subject to certain adjustments.

“AOL is a leader in online video and the combination of AOL and will create the leading video platform in the industry,” said Tim Armstrong, chairman and CEO, AOL, from New York.

He said the founders and team are on a mission to make advertising as “easy” as e-commerce. Joining forces, he said the two companies will now “aggressively” pursue that vision.

“Two trends are prevalent in the video space right now – the movement from linear television to online video and the shift from manual transactions to programmatic media buying,” he said.

“ is positioned squarely in front of the huge opportunity these trends are presenting.”

Right now, AOL invests in the digital video space by focusing on premium content and premium publishers.

Linear TV and online video

As for, it is headquartered in San Mateo, California. Its programmatic platform aims to give buyers and sellers automated tools to plan, buy and measure across linear TV and online video. has, in the past, earned the accolade ‘Fastest-Growing Private Company in Silicon Valley’ by the the Silicon Valley/San Jose Business Journal.

As well as its California base, has US offices in Chicago, Los Angeles and New York, and international offices in Australia, India and London.

At the minute it is a privately held company backed by Bessemer Venture Partners, Gemini Israel Funds, Redpoint Ventures and Spark Capital.

Aggressive growth curve

AOL believes the acquisition of will spell the “only” complete global programmatic video technology stack for publishers and advertisers across all screens.

It describes as one of the fastest-growing platforms on the internet, having grown global revenue more than 100pc per year in each of the past three years.

In 2012, it seems supported more than 26,000 global ad campaigns, which ran on about 9,500 websites.

“At, we are focused on building the most important business within the most important category in digital advertising,” said Amir Ashkenazi, CEO,, in a statement today.

“We believe that most TV advertising will soon be traded programmatically on platforms like ours,” he said. “The combination of AOL and accelerates our vision of efficient and effective TV and video advertising.”

Carmel Doyle was a long-time reporter with Silicon Republic