Reasons AOL Purchased Millennial Media Without Profits


AOL recently purchased Millennial Media, an advertising company that places ads on mobile devices. Recent financial performance of Millennial Media might make marketing managers wonder why AOL would do such a thing. Here are some things you should know about the acquisition and what it means for the future of AOL’s advertising division.

Millennial Media Has A Poor Stock Portfolio

Millennial Media launched in 2006, but did not go public until its initial public offering of stock in 2012. The company warned that it has never been profitable, and noted it may never be. Millennial Media finished its second quarter in 2014 in the bottom 2% of the New York Stock Exchange listed stock, and stock lost almost 40% in value from 2014 to 2015. This is unusual for technology companies, but Millennial Media remains important in the mobile advertising industry.

They Have Fresh Leadership

Millennial Media was upfront about its poor financial performance in 2014. Rather than continue to repeat the same strategies and risk greater decline, they changed gears by electing new leadership. Jason Kelly was named President of Managed Media by a top-notch CEO Michael Barrett. The two previously worked together at Admeld, which was successful enough to be bought out by Google in 2011. Changing top leadership is a common way for businesses to change strategy and look towards the future.

It Is About Growing Its Capabilities

Despite poor stock performance in 2014, Millennial Media was able to acquire Nexage the same year. Nexage was a privately held technology firm based in Boston, Massachussetts. The company is a leading provider of Real-Time Bidding (RTB) technology that assists in automating the selling and buying of mobile advertising. This acquisition gave Millennial Media a unique supply chain management solution called Supply Side Platform (SSP), allowing publishers to expose impressions to classic networks such as Facebook and Google. It also connects Millennial Media to 225 programmatic buying networks, monetizing part of the advertising process on the global market.

It Is About Evolving As A Company

AOL’s business strategy has changed significantly over the years. It started as a leading Internet Service Provider, and now is responsible for growing and publishing digital content on a variety of websites. Despite no longer being a household name, AOL has stayed in business by following the market of digital advertising. Purchasing Millennial Media allows AOL to continue to evolve with the digital market by bringing talented programmers to their team.

It Is About Growing Their Customer Base

By purchasing Millennial Media, AOL was able to grow its customer base almost overnight. Millennial Media’s mobile ad network comprises of over 1 billion users in over 65,000 apps globally. This includes over 120 global networks such as Google’s Admob, Facebook’s Audience Network and iAd. Verizon took a similar stance on growing its customer base and purchased AOL in 2015, absorbing the entire customer base. This strategy is not new to the business world, hence the phrase, “if you can’t beat them, join them.” There is now a huge customer audience for these combined technology companies.

Marketing Managers could learn from Millennial Media’s business history in mobile advertising. Despite poor financial performance in 2014, they remained strong enough in the industry to be bought by a leading digital content company. Armed with a larger customer base, they are poised to reach a staggering number of consumers in the coming years. Continuing to evolve with the digital advertising industry make Millennial Media a company marketing managers may wish to emulate or pair up with in upcoming digital advertising ventures.

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