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Where AOL Stands in the Digital Advertising Market

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Oct. 1 2015, Updated 10:09 a.m. ET

AOL’s acquisition by Verizon

Earlier this year, AOL was acquired by Verizon Communications (VZ) for $4.4 billion in an all-cash transaction. This acquisition gave Verizon access to popular content brands such as TechCrunch, Engadget, and The Huffington Post. But more importantly, AOL provided Verizon with its video ad technology.

AOL’s ad technology will make it possible for Verizon to monetize its video content through advertising. It will help Verizon leverage the fast growth potential of the video ad market. According to a report by eMarketer, total ad spending in the United States on the digital format is expected to top ~$82 billion by 2018.

Now let’s take a look at how AOL developed this technology and its current position in this market.

In 2010, AOL acquired 5min Media, a video syndication and distribution platform. In 2013, AOL acquired Adap.tv, a video ad exchange platform. AOL developed its video ad technology by leveraging Adap.tv technology.

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AOL ranked fifth in list of video ad properties

As the above chart indicates, according to a June 2015 comScore report from comScore, AOL is ranked a distant fifth among all online video ad technology properties in terms of percentage reach of the US population. BrightRoll, Google (GOOG), and LiveRail are the top three players in this market. Last year, Yahoo! (YHOO) acquired BrightRoll, and Facebook (FB) acquired LiveRail. It shows how much value these larger Internet players place on video ad technology.

Google (GOOG) is an important player and is ranked second in this market. Last year, the company launched Partner Select video ad technology. Partner Select is a premium programmatic video marketplace to help publishers monetize their video content. It also helps ad agencies reach quality video content on the Internet.

You can gain diversified exposure to Google by investing in the PowerShares QQQ Trust Series 1 ETF (QQQ), which invests 4.32% of its holdings in the stock.

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