Agencies Approve Of AOL’s Plunge Into Programmatic Video

AOL is not taking its foot off the programmatic gas pedal, and agencies are impressed.

The $405-million acquisition of video ad platform sheds new light on other recent developments, including the hire of Razorfish’s global CEO Bob Lord to lead AOL Networks and a planned “programmatic upfront” event in September.

Their obvious conclusion: AOL’s chairman & CEO Tim Armstrong wants the TV money.

“TV is already moving online and AOL has made it very clear in their upfront this year that they are prioritizing digital video,” said Sacha Xavier, partner, media & innovation director at Neo@Ogilvy. “At the upfront, I questioned how they would make this change so quickly and this acquisition is part of the answer. More importantly, it says to me that they are ready to move beyond mass impression tonnage that their ad network was known for.”

Additionally, she noted, “this acquisition provides a nice slot for their original programming, creating an [owned-and-operated] type arrangement for, which it did not have as a standalone.”

From a “what works” perspective in regard to future ad expenditures, Kristi Argyilan, president of MAGNA North America noted that dollar for dollar, “video ads are the most effective type of standard advertising,” regardless of method of delivery. Expect to see video advertising become increasingly device-agnostic, she said, and in the short-term, “we expect to see more brand advertising dollars shifting to targeted video at the expense of display and traditional broadcast.”

Steve Katelman, EVP of global strategic partnerships, digital at Omnicom Media Group, said today’s acquisition is further proof of AOL’s commitment to delivering ad tech solutions for programmatic media to both buyers and sellers.

“AdLearn Open Platform [AOP] and ADTECH Marketplace will greatly benefit from the technology stack, providing a holistic and best of breed solution for advertisers and publishers,” he said, adding fragmentation in ad tech has not delivered the simplicity and scale advertisers and publishers are looking for. “We’re pleased to see continued competition in the market, ultimately providing better solutions and results for our clients.”

In terms of competition in the video ad inventory and programmatic space, they will “absolutely, at minimum, challenge Google,” Xavier noted, adding that this would result in more competitive pricing on the buy side, and ultimately, could spawn a few more acquisitions by competitors and heat things up in the marketplace.

Tammy Bondanza, SVP of digital media for Hill Holliday, said that in addition to the move’s boost to inventory at scale, it will bring a level of programmatic awareness to clients and agencies.

“We’re fully integrated and have been involved in this since Adam Cahill started up our division a couple years back, but in general, you sometimes need that manpower to sell that internally and to clients.”

While Bondanza views the acquisition as a bit of a no brainer given Google, Yahoo and MSN’s parallel strides in digital media, “I think the only speed bump is how it will play out in sales [because you’re going to now have multiple people in the room]… but that’s an easy hurdle to get over when you consider the positives for the space.”

According to recent Magna Global estimates, television ad growth is expected to slow this year – with ad sales increasing by 2% to $196.5 billion compared to the slightly higher 5% growth of the category in 2012. Conversely, digital media ad revenues are expected to increase 13.4% with formats like search, video, mobile and social contributing to that uptick.

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