By Martha Vazquez and Adam Lotia
The recent Verizon announcement regarding its purchase of AOL for $4 billion has turned a lot of heads. Though a lot of people haven’t even heard the name AOL in quite some time, they do still exist. But why would a telecom company want to purchase a company like AOL and what will they do with it?
AOL is known more by its media creators like Engadget. Through these web properties, AOL has been creating more mobile video marketing expertise. Mobile video marketing is becoming very popular as more people are now accessing their mobile devices to view mobile videos. In fact, according to Adelie Studios, 59% will watch a video to completion that is less than one minute. And according to Invodo, 92% of mobile video viewers share videos with others. Basically watching an advertisement from a mobile device has become more common that watching an ad on TV, so as a result Verizon is eager to take advantage of this revenue generating opportunity.
The world is definitely changing on how we view advertising and content. AOL is big on placing ads in mobile videos and Verizon is big on mobile, so the combination of these companies should not come as a surprise. But, we have to ask: Why would Verizon want to start looking at mobile advertising? From a carrier perspective, the building of new revenue streams is becoming more and more common. For example, IoT has become a key focus for most mobile carriers. Verizon is one example of a carrier that is losing prepaid subscribers, but they are not worried about this because they are focusing on other areas of the business. Verizon has already acquired companies such as Terramark and Hughes Network Fleet. Revenue is decreasing for carriers as a result of lower prices per data connection, so building new revenue streams is what will be important in the long run.
Verizon continues to be in a pricing war with other carriers, and things are changing quickly where carriers cannot focus only on wireless services. The market is saturated and competitive, looking at other ways to generate revenue will be key to future growth. In order to stay competitive with companies like AT&T’s pending acquisition of Direct TV, we’ll have to wait and see if Verizon can keep up with the ever-changing mobile landscape.