AOL Confirms It Is Buying Millennial Media In $238M Deal To Expand In Mobile Ads

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This just in: AOL, itself acquired by Verizon for $4.4 billion earlier this year, has announced that it is making another purchase of its own. It is buying Millennial Media as it continues to build out its presence in digital advertising and specifically mobile ads. AOL will be paying $1.75/share for publicly traded Millennial, working out to an enterprise value of $238 million after accounting for debt.

TechCrunch first broke news of the impending deal in July.

While a lot of AOL’S — and the wider industry’s — M&A focus in recent times has been about the acquisition of ad tech tools to further expand in areas like programmatic advertising and making sure that advertisers are getting the biggest bang out of the data they are amassing about online consumers, a turn to Millennial Media is in a way a reminder of one of the more basics aspects of the online advertising game: volume, volume, volume.

The deal will give AOL a much bigger footprint in mobile advertising, with Millennial’s network covering some 65,000 apps and 1 billion active users globally in markets like the U.S. but also Singapore, Japan, UK, France and Germany.

“AOL is well positioned as consumers spend more and more time on mobile devices, and as advertisers, agencies and publishers become more reliant on programmatic monetization tools,” said Bob Lord, President, AOL, in a statement. “As we continue to invest in our platforms and technology, the acquisition of Millennial Media accelerates our competitive mobile offering in ONE by AOL and enhances our current publisher offering with an ‘all in’ monetization platform for app developers.”

“By joining AOL, we will be adding additional mobile expertise to AOL’s growing technology assets,” said Michael Barrett, President & CEO of Millennial Media, also in a statement. “I am excited by what this acquisition means for our shareholders, our employees and our partners.”

This is also part of a bigger strategy for AOL and its owner Verizon. When the carrier acquired AOL, executives at the companies noted that monetizing and further growing Verizon’s vast mobile audience — it was already one of the world’s biggest mobile operators — was one of the main reasons it was interested in AOL, which already had developed an advertising network that ran across both sites owned by AOL as well as those owned by third parties (TechCrunch is one of AOL’s properties). Buying Millennial to expand that to yet more third parties expands that strategy even further.

For Millennial’s part, while the company — one of the older mobile ad firms — had developed an extensive advertising network, some critics believed that the company had not really kept up with bigger innovations in ad tech. When it went public in 2012, the company popped with an eye-watering valuation of $2 billion, a far cry from its sub-$300 million valuation today. In that regard, coming together with a company like AOL to wrap more ad tech around its network also makes some sense.

The mobile ad market is still a relatively small part of the wider digital ad industry, but with consumers’ big swing to using smartphones and tablets as their sole computing devices, this is rapidly changing, with a lot of that move being fuelled by innovations in ad tech.

AOL cites figures from eMarketer that say 69% of mobile ad spend will be bought and sold programmatically (working out to over $14 billion), with programmatic video will reach $4 billion by 2016. It also notes figures from Cowen & Company that note mobile display and video advertising revenues in 2015 at $3.8 billion and growing to $9.2 billion in 2018.

AOL says the deal is expected to close this fall, subject to regulatory approvals.