What a Verizon-AOL Tie-Up Could Mean for Advertisers

A Combined Entity Could Be a Big Player in Targeting Users Across Devices

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Verizon has approached AOL about a possible acquisition or joint venture, according to Bloomberg News.

No deal is imminent, according to the report, and it's not unusual for chatter like this to break out during big industry events like this week's CES, so there's reason to be skeptical. "Buying a legacy business such as AOL's, just to gain access to an emerging technology, has not been VZ's style," wrote Macquarie Capital analyst Kevin Smithen in an email note toi nvestors Tuesday morning. Verizon CEO Lowell McAdam also disputed that a significant acquisition talks are taking place.

But, if some sort of tie-up were to happen, the two companies could put together an intriguing product that would have implications for others in the digital-advertising industry.

Verizon has the ability to identify users as they move between desktop and mobile devices. That data could solve one of the biggest problems plaguing digital advertising companies, which, due to poor functionality of cookies on mobile devices, have difficulty getting their targeting to work outside of desktop.

Verizon is already dipping its toes into ad-tech in an attempt to put this data to use. Last year, it launched PrecisionID, a cookie alternative that works across screens, with a limited group of partners.

AOL, for its part, has a powerful bundle of ad-tech software that is used to buy ads across the web. If Verizon creates a single identifier and grants exclusivity to AOL's ad-tech platform, the result could be valuable for advertisers and lucrative for the combined entity.

The only other big player with a solid solution to tie user identity across devices is Facebook. Rich in login data, the company relaunched the Atlas ad server in September to take on this problem. AOL introduced technology to address the issue last October, but it's not as accurate as Facebook's.

If Verizon doesn't acquire ad-tech of its own, it will need to continue working as a data partner to enable targeting across screens. But with its own stack, it could stand shoulder to shoulder with Facebook on this field.

AOL and Verizon declined to comment. Both companies stock prices are up at press time.

Contributing: Mark Bergen

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