The last 10 years have brought about massive change in the advertising world. Who would have thought we'd go from "Mad Men" drawing up campaigns on poster board to techies devising systems that bid that same advertising out to thousands of advertisers and place the ad in milliseconds?
The idea of programmatic advertising would have sounded crazy 30, 20 or even 10 years ago. However, within the next five years, advertisers will be able to target exactly who they want at the exact place and time they want with an ad they just won the right to place.
AOL, which has been at the advent of this revolution, has spent the last 10-15 years amassing an advertising powerhouse to be in this position. But to make programmatic advertising happen, you need more then just technology, you need scale, big data, users and a highway straight to the inventory where all of these ads go.
Along comes Verizon.
Verizon has evolved from a traditional telecommunications business by consistently staying ahead of the pack and leveraging its size, scale, audience and bank account.
Verizon's acquisition of AOL for $4.4 billion earlier this month helps legitimize that the future of advertising is about bringing advertising, data, location and content-focused creatives together, as consumer attention continues to be divided among traditional television, digital video, smartphones and tablets.
With AOL currently controlling technology that provides advertising to over 70 percent of all Internet users and Verizon being able to leverage this against 120 million customers and its stores of data, the future looks to be on the verge of happening.
Verizon, which has the capability to invest more heavily into the platform AOL has amassed over the years, is geared to marry the consumers and advertising even more closely. In effect, they hope to achieve the holy grail of advertising — to show all consumers an advertisement that is highly relevant to them at that moment in which it is shown.
But the Verizon-AOL merger really only brings to fruition an opportunity. Verizon aims to take what AOL has built and catapult it into a future generation technology. That will not only allow Verizon to capitalize a larger percentage of the future programmatic advertising market but also be the gatekeeper to a large portion of the public utilizing their network whether cable, Internet or mobile.
There is no doubt that programmatic advertising continues to gain ad-spend share, but it presently remains a small part of the larger ad budgets. In a total global ad spend expected to exceed $500 billion this year, programmatic advertising comprises only $27.8 billion globally. But that number is expected to reach $53.8 billion by 2018, and the Verizon-AOL movement will lead the way.
The potential impact on businesses and brands is enormous. If Verizon is successful, brands and businesses will now have one of the largest targeted platforms backed by big data to more highly target advertising then ever before. The potential cost savings and efficient allocation of advertising dollars should lead to a next generation of investment and product development by consumer-driven companies, who theoretically will now have more available dollars to invest in product development from the savings of no longer advertising inefficiently.
This represents a tremendous opportunity and challenge for Verizon — to transform the AOL advertising platforms into a machine that can attract more advertising dollars than the competition.
If Verizon is able to successfully migrate the AOL acquisition and marry it with a vast array, big data and user base, Verizon will hold the key to a powerful technology. With a direct connection into the homes and hands of a large user audience, they can rival Facebook and Google as the platform of choice for display, video and mobile advertising while ushering in a new era.
