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How does AOL stack up against other 'scale players' like Facebook and Google?


By Ronan Shields | Digital Editor

September 18, 2015 | 8 min read

After a notable few months that has seen its scale ramp-up massively, AOL is now heralding itself as one of the largest players in the automated advertising market, with ‘openness’ as its key distinction when compared to the likes of Facebook and Google.

The Drum caught up with AOL president Bob Lord at this week's Dmexco to find out more about how the proposition will roll out, and also gets his take on the ‘open’ vs. ‘closed’ debate, where he draws reference to one of the most famous adages in the history of the advertising industry.

AOL has gone through an eventful few months, firstly with its $4.4bn purchase by US mobile operator Verizon Wireless, followed by its partnership with Microsoft, which effectively saw the latter hand over the keys to its advertising operations to AOL.

This eventful three month window was then topped off with AOL’s $238m purchase of mobile advertising specialist Millennial Media in a bid to further its cross-screen proposition. Hence the resulting AOL proposition to advertisers will look drastically different compared to just 12 months earlier.

How AOL fits into Verizon’s data-led business

The addition of AOL’s online advertising offering augments Verizon Wireless’ Fios TV set-top boxes, wireless mobile offering, plus its fixed-line internet services, as well as its new business unit, offering to make it one of the most formidable online services in the industry.

The offering should help advertisers tell sequential stories to consumers across screens, but outside of its US base, how will the ‘tech stack’ prove meaningful to advertisers?

Lord explained how the offering can be rolled out globally: “There’s another business Verizon owns, it’s called VDMS, and it competes against Acaman, and it delivers video content in some 50 countries. The thought is to take two paths for us to bring the data to people.

“Number one is to tap into the VDMS data, because that’s there because they’re delivering content to mobile devices and set-top boxes; and or looking at what kind of relationships Verizon has across the globe to get into the strategic markets we need to get into the strategic markets through partnerships.”

Offering audience insights on a global scale

Both Verizon and AOL hope to leverage the network operators’ global relationships with other telecoms providers to offer true scale, according to Lord. He added: “So what we believe is that if we build our data and mobile programmatic offering in the US and Canada that we can use that as a plug-and-play to carriers within the ecosystem, so they can monetise some of the data they have in the local markets.”

The potential audience insights that can be gleaned from mobile operator data is without question – take for instance the anticipation among advertisers about the Weve offering in the UK - but thus far players in the industry vertical have been cautious to open the floodgates due to privacy concerns.

“There’ll be a lot of opt-in around what the data is,” explained Lord, adding that if its well received among consumers, that the Verizon/AOL offering can rival that of the online advertising industry’s leading players such as Facebook and Google when it comes to offering scale.

Commenting on how the AOL/Microsoft tie-up will play out, he also claimed that it will bring further scale and coverage to its platform – deepening its rivalry with the above-named competitors. “The combination of the Microsoft data with the AOL data brings effective value-creation to advertisers, and a consumer, as it provides, not just reach, but also information on the customer transaction.”

‘Openness’ as a key point-of-difference

Facebook and Google are rightly deemed the incumbents in the digital advertising space, with the pair in receipt of 75 per cent of all mobile spend, according to analyst firm eMarketer. But both have been criticised by many in the online advertising space as operating within ‘closed ecosystems’, or ‘walled gardens’, which makes conducting multi-channel campaigns difficult for advertisers.

In a recent interview with The Drum, Facebook's vice president of advertising technology Brian Boland rebutted such claims, adding that any restrictions it does place on advertisers’ view on audience data is motivated by its eagerness to protect the privacy of its 1.5 billion users.

AOL’s marketing themes at this year’s Dmexco event have centred on its commitment to a more ‘open ecosystem’, where advertisers can operate at scale across different ecosystems, while limiting the headaches raised above.

Balancing ‘openness for advertisers’ with ‘privacy for consumers’

However, how does AOL/Verizon balance the desire for openness among advertisers, with consumers’ increasing preference to protect their online data whenever these two crucial market demands are seemingly at odds with one another?

“My perspective is that the whole messaging about closed versus open is going to start to converge soon. I believe that if I can do better targeting to provide a value exchange with a consumer when I take an advertiser’s data set, and I can cross-reference it with my data.

“I’m not talking about personalised data, but when I cross-reference it I can make that advertising better. I don’t believe then that I own that data. I believe then that the brand owns that data, and they can do what they want with it.”

How AOL’s ethos differs from ‘closed’ players

Lord then draws a distinction between the view he advocates, and the one espoused by Facebook.

“I’m not talking about giving the brand personal data. I’m talking about giving the brand predictive modelling, and a better understanding about that consumer. So our open strategy is all about how the brand or advertising agency owns the data, and not the media company,” he says.

Despite Facebook and Google being commonly referred to as a social network, or a search company, many in the advertising industry would assert that they effectively qualify as media owners given that they sell ads against content on their platforms.

“Some of our competitors would say that they own the data, and the brand doesn’t have access to it, I think that’s wrong-headed. For one thing about closed ecosystems is that it doesn’t let advertisers compare apples with apples. So I will share all my data with advertisers, so you can compare me to who’s also in the market competing with me [for spend],” adds Lord.

'Half the money I spend on advertising is wasted; the trouble is I don't know which half'

For Lord, having to buy across both open and closed ecosystems means advertisers are effectively ‘buying blind’ when it comes to the investment of large swathes of their media budgets, as they can compare the results of their ‘open buys’ on an objective basis. However, the performance of spend invested in more closed ecosystems is effectively siloed, resulting in a dynamic that equates to one where the seller has the upper hand, not the buyer.

“When we get to the apples to apples comparison, I think that’s when the truth starts to come out.” He further took the question: “So whether or not you say you are closed or open, the point is: do you own the data or not; and are you allowing the comparison of the proper results that come out of the buying?”

For Lord, if the advertising industry as a whole does not come to a consensus on “open data comparison” then it risks being set back by a matter of years.

“If we don’t get to this stage then advertisers are still operating in a black box, and you’re back to the stage when you know that 50 per cent of your spend is having an impact,” he says in allusion to the above famous John Wanamaker adage on advertising effectiveness.

On the prospect of a pan-industry alliance to solve this problem, he says “there’s always talks going on”, adding that it’s important the digital advertising industry doesn’t have one or two companies “calling the play”.

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