Why AOL Bought Mobile Ad Net Millennial Media for $238 Million

Deal Will Help AOL Battle Google and Facebook, Says President Bob Lord

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In its latest bid to rival Google's and Facebook's ad-tech businesses, AOL has acquired mobile ad network Millennial Media for $238 million after accounting for the cash and debt that the ad-tech firm already has on hand, according to an AOL spokesman. The acquisition is meant to help AOL keep step with the competition as it transitions its ad-tech business from desktop computing to more of a mobile focus following the portal's acquisition by Verizon earlier this year.

"The most important thing we're doing here is creating a mobile technology company," AOL president Bob Lord said in an interview Thursday morning.

AOL already had something of a mobile ad business, but it was limited to the mobile web. That's very limiting, as 85% of the time people spend on their phones is within apps, according to Forrester. The 65,000 thousand apps that Millennial Media says use its technology to automate their ad sales should help to close the gap with AOL's competition.

In the past year Facebook has officially rolled out a mobile in-app ad network, and Yahoo has acquired mobile ad-tech firm Flurry, which operates its own in-app ad network. All of them compete with Google's AdMob in-app ad network, which spans hundreds of thousands of apps.

"Millennial brings us the in-app inventory as well as it brings us the programmatic and automated technology to serve content and advertising," Mr. Lord said.

That inventory and technology will be combined with AOL's own ad technology and parent company Verizon's data on people's mobile behaviors, as well as the contextual information Verizon can add such as device location.

The data that Verizon and AOL bring, attached as it is to particular consumer accounts, is particularly important as companies grapple with how to target ads across both the web and apps. The web's default tracking mechanism, the cookie, doesn't carry over to apps.

Facebook has been able to clear that divide with its pool of 1.4 billion authenticated user accounts, which allows it to recognize those users and target ads across its mobile in-app ad network. And last year Ad Age reported Google had begun testing a way track people across the mobile web and apps with an anonymous identifier, so that when someone switches from a mobile website to an app, advertisers don't mistake her or him for an entirely new person.

"We're going to rival what Facebook and Google have in market," Mr. Lord said.

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