Why Purchase of Millennial Media Brings Verizon Closer to Its Data Dreams

Mobile Network Acquisition Will Help Verizon Monetize Data

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Credit: Bloomberg
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AOL won't talk about it, but the steady stream of mobile activity and profile data the firm now has at its disposal from its new parent Verizon makes its Millennial Media acquisition far more powerful than it would otherwise be. AOL bought mobile ad network Millennial for $238 million Thursday.

The acquisition brings AOL closer to its goal of targeting select users from their phones to the web to TV, at work, at home and in between. Millennial's in-app ad network inventory representing 65,000 apps and lots of mobile login profile data certainly helps AOL edge up on competitors Google and Facebook.

"They're actually bringing true login data that comes from third-party publishers," said Chad Gallagher, global director of mobile at AOL, of Millennial.

Mr. Gallagher is among the many AOL execs working to turn the spreadsheets, charts and graphics used to show the company's value to Verizon into reality. He was tight-lipped about what the newly-tied companies are planning, but expect AOL's Millennial buy to be as beneficial for Verizon as it is for AOL.

As Verizon and other telcos struggle with decreasing mobile subscriber growth and constant customer churn, they have attempted to turn their mobile operator data -- location and mobile web behavior information they can tie directly to personal data like home addresses -- into dollars. Verizon's Precision Market Insights business was an attempt at that, though observers and insiders suggest the division is on the back-burner and will probably be turned over to AOL in some capacity.

AOL's advertiser client base, its One cross-channel ad platform for display, video and addressable TV, along with Millennial's mobile-targeting platform, scaled inventory and its own client connections are the components Verizon needed to spin its mobile operator data into a tangible revenue stream.

"Verizon knows much of the industry guesses at who customers are, and that's the difference between deterministic and probabilistic targeting," said Mike Sands, CEO of cross-channel marketing tech firm Signal. The Millennial acquisition coupled with the Verizon connection "gives AOL a complementary piece of technology…but also the ability to bridge between the known and unknown world," he said.

As part of its data monetization quest, Verizon recently started a division dedicated to the Internet of Things. The firm has partnered with technology companies that connect the digital world to the physical, including AdMobilize, which offers a beacon-like device that uses a built-in facial recognition camera to detect the gender, age range and dwell time of people viewing out-of-home ads or in and around real-world business locations. Verizon is co-selling the AdMobilize technology to its clients, according to Rodolfo Saccoman, founder and CEO of AdMobilize. The telco is not providing any data to Admobilize, he added.

"The carriers that are really thinking out the box…this gets them to revenue models that can not only bring them additional sales growth but at the same time it's also expanding their reach," said Mr. Saccoman.

Though the details aren't clear, Verizon will now be able to match its own data on individual consumers with identifiable data held by Millennial and AOL, all of which likely will be hashed or encrypted in order to remove personally-identifiable information, but remain linked through anonymized IDs. That will allow AOL to aim ads at what it believes to be the same person on the desktop, in mobile and via addressable television.

AOL has been developing ways to target "deterministically" for two or three years, said Mr. Gallagher, repeating the term he and others in the industry see as distinctive from CRM or first-party data targeting because it incorporates other data enhancements and can be done via multiple channels.

Deterministic targeting means "to be able to understand that user and then tie that user to multiple devices," said Mr. Gallagher.

Marketers and tech innovators may get excited about the possibilities of so-called deterministic cross-channel targeting, but these emerging capabilities -- based on unprecedented consumer data connectivity -- raise heightened privacy concerns.

The government is watching. In November, The Federal Trade Commission will hold a workshop to discuss cross-device tracking, how it works, the types of data companies glean from such technologies, benefits and privacy risks to consumers, and whether industry self-regulation is enough to counteract those risks.

"We are one of the leaders of that conference in November," said Mr. Gallagher regarding AOL. "Our privacy team sits right next to our product team and everything we're going to do, the privacy team says, 'Hey, there better be an easy opt-out.' We're absolutely not skirting any lines on the privacy side."