Verizon Communications Inc. sees AOL Inc.’s advertising technology as the machinery it needs to pump profits from its upcoming mobile streaming service, featuring live TV, original shows and pay-per-view.
Verizon, the largest U.S. wireless carrier, completed its $4.4 billion acquisition of AOL Tuesday. The plan is to make Verizon’s more than 100 million monthly subscribers a potential source of revenue for AOL’s automated ad system, which finds and inserts relevant ads in a flash.
“We have the oil in the ground, we need the rig to bring it up,” Marni Walden, Verizon’s executive vice president of product innovation and new businesses, said during a Bloomberg TV interview today with Betty Liu.
Walden is leading the New York-based company’s first large-scale consumer venture outside phone services. Through AOL, Verizon will compete against web ad leaders Google Inc. and Facebook Inc.
Verizon will introduce its mobile video-streaming service this summer to help bring new revenue as it faces challenges in its wireless business from smaller and price-cutting rivals like T-Mobile US Inc. The service is aimed at TV viewers looking for more selective program packages to supplement or even replace traditional pay-TV bundles.
Former AOL Chief Executive Officer Tim Armstrong will continue to run the AOL operations within Verizon and oversee digital media services.
While AOL is a relatively small competitor to Google in Internet advertising, that will change, said Armstrong, who reports to Walden.
“I would be surprised in the next three years if we do not end up being in the top three market share holders in this space,” Armstrong said in the interview.