September 3, 2015 Last Updated 10:44 am

Verizon-owned AOL acquires the mobile advertising company Millennial Media in $248M deal

This acquisition should not be a surprise if you have paid attention to earnings reports: AOL is buying the ad network Millennial Media. If you only know Millennial Media from its insight reports, then this will come as a shock.

Millennial Media is not profitable, reporting a $15.5 million loss in the last quarter. Revenue fell, as well.

“We have built a strong, comprehensive mobile ad marketplace, with what we believe are the right tools and talent to help meet the needs of our dynamic market,” said CEO Michael G. Barrett in the last earnings statement. “Clearly however, revenue is ramping more slowly than we had hoped. We are evaluating strategic opportunities to maximize the value of our capabilities in this rapidly evolving ecosystem.”

That made the company prime for an acquisition (or possibly addition funding).

Millennial Media has always been good at reaching out to the press and promoting is insights. One hopes that like Flurry, which is now part of Yahoo, MM will continue to be as open and helpful with data as they have in the past.

To see just how much good information the company produces, do a search here at TNM for “Millennial Media” to see their reports.

“By joining with AOL, we would be creating a media and technology powerhouse with true mobile expertise that would accelerate AOL’s innovation in mobile monetization for publishers and strengthen its ONE for Advertisers mobile offering,” Barrett said today in an email to customers.

“For our advertiser clients, this would mean scaled mobile and in-app audience targets from Millennial Media’s over 100 million device IDs available across the robust AOL ecosystem to better engage with all ad formats and screens. It also means access to ONE by AOL for Advertisers, a comprehensive suite offering media planning, audience management, creative optimization, analytics, and attribution, as well as AOL’s market-leading display, video and TV DSPs,” Barrett said.

“For our publisher partners, this acquisition would mean greater monetization opportunities optimized to generate the most revenue possible for publishers and developers across all screens (desktop and mobile, web, and app).”

Here is the AOL acquisition announcement:

NEW YORK, NY – September 3, 2015 – AOL today announced its continued investment in cross platform programmatic technology for marketers and publishers by signing an agreement to acquire Millennial Media, Inc., a leading end-to-end mobile platform, for $1.75 per share of Millennial Media common stock.

MM-logo-330Following AOL’s recent acquisition by Verizon, which operates the nation’s largest and most reliable wireless network, and its global enterprise-level partnership with Microsoft, today’s announcement further strengthens AOL’s mobile capabilities and underlines its position as the first global mobile media technology company. AOL now operates scaled global content brands, a scaled global content delivery network, a scaled global programmatic advertising platform and a subscription services platform.

With the acquisition of Millennial Media, AOL will:

  • Add a leading supply-side platform for app monetization with over 65,000 apps to its publisher suite of offerings
  • Add significant mobile brand advertising scale across ONE by AOL
  • Have access to approximately 1 billion global active unique users and robust addressable and cross-screen targeting capabilities
  • Accelerate its mobile position in key international markets, including Singapore, Japan, UK, France and Germany
  • Add world-class engineering, sales and product talent that specialize in mobile to AOL

“AOL is well positioned as consumers spend more and more time on mobile devices, and as advertisers, agencies and publishers become more reliant on programmatic monetization tools,” said Bob Lord, President, AOL. “As we continue to invest in our platforms and technology, the acquisition of Millennial Media accelerates our competitive mobile offering in ONE by AOL and enhances our current publisher offering with an ‘all in’ monetization platform for app developers.”

“By joining AOL, we will be adding additional mobile expertise to AOL’s growing technology assets,” said Michael Barrett, President & CEO of Millennial Media. “I am excited by what this acquisition means for our shareholders, our employees and our partners.”

According to eMarketer, 69% of mobile ad spend will be bought and sold programmatically (more than $14 billion), and programmatic video will reach $4 billion by 2016.* Furthermore, Cowen & Company expects mobile display and video advertising to grow from approximately $3.8 billion in 2015 to $9.2 billion in 2018 at a compound annual growth rate of 35%.**

Founded in 2006, Millennial Media is headquartered in Baltimore, MD and has additional U.S. offices in Atlanta, Boston, New York and San Francisco, and international offices in Hamburg, London, Paris, Singapore and Tokyo. Millennial Media’s portfolio of assets includes acquisitions of TapMetrics, Condaptive, Metaresolver, Jumptap and Nexage.

The transaction will take the form of a tender offer followed by a merger, with Millennial Media becoming a wholly owned subsidiary of AOL upon completion. The transaction is subject to customary regulatory approvals and other closing conditions, and is expected to close this fall.

Goldman, Sachs & Co. served as AOL’s financial advisor on the transaction, and Wachtell, Lipton, Rosen & Katz served as AOL’s legal advisor.

LUMA Partners served as Millennial Media’s financial advisor on the transaction, and Goodwin Procter LLP served as Millennial Media’s legal advisor.

* eMarketer (October 2014) – US Mobile Programmatic Display Ad Spending
** Cowen and Company, “Annual Ad Buyer Survey III: 2015 Outlook,” January 12, 2015

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