5 factors at play in the rumored AOL acquisition of Millennial Media

Last week’s TechCrunch report that AOL is looking to acquire Millennial Media has yet to be confirmed. Our requests for official comment were met with silence from Millennial Media and a “no comment” from AOL.
If it happens, the $300-$350 million deal (reportedly) that would bring a publicly-traded digital ad company that bills itself as an independent network under the Verizon umbrella would figure to have major implications for the local and global adtech world. It’s already playing well in the tech press and on Wall Street.
Let’s take a look at a handful of talking points.
There has been a lot written on this deal by people who know the adtech world inside and out, so some of these are admittedly culled from other sources:

1. Baltimore adtech shakeup?

The deal has the potential to bring two of Baltimore’s big adtech operations under the same giant corporation.
Millennial Media was founded in Baltimore, and its global headquarters remains in the former Emerging Technology Centers space in Canton’s Can Company building. AOL’s ad-focused operation, AOL Platforms was built on the company’s $435 million acquisition of Advertising.com in 2004 and also has a large presence in Baltimore. AOL Platforms just moved into a big new space at Natty Boh Tower.
In fact, Advertising.com has a role in the genesis of both outfits, as Millennial Media cofounders Paul Palmieri and Chris Brandenburg are both former employees of Ad.com. (They became business partners after leaving.) At this stage, there’s no word how the two shops would interact in any acquisition deal, but it seems like it will become the latest twist in the Baltimore adtech saga.

2. Shareholders rejoice?

Millennial Media investors seem to like the idea of a deal. On the day the TechCrunch report hit, MM shares were up 28 percent, RCR Wireless reported. That qualifies as a price “soar” in Wall Street lingo.
The stock market initially responded well to Millennial Media as the company raised $130 million on its 2012 IPO, but the company has lost nearly 90 percent of its $2 billion valuation since. Since 2012, MM has suffered dwindling revenues as the big tech companies like Facebook and Google have built their own ad exchanges. Becoming part of AOL/Verizon is a viable path toward competing with those big players. Plus, the $4.4 billion AOL just got from the Verizon acquisition leaves them with a lot of cash to put up for Millennial Media. A public company has to please shareholders, and this deal could do that.

3. Last stop on the acquisition train?

As it sought to turn its fortunes around and compete with the likes of a Google, Millennial Media made acquisitions of their own. Since going public, the company acquired Boston-based ad companies Nexage and Jumptap, as well as mobile targeting company Metaresolver. These acquisitions were made as MM looked to build its own digital ad network. But, as a source pointed out to AdExchanger’s Allison Schiff, they also add technology that could be valuable for a company like AOL/Verizon.

4. AOL mobilizing?

In its own push to compete with Facebook and Google on the advertising front, AOL has identified a gap in mobile capabilities, according to the Wall Street Journal. The Verizon deal offers AOL access to a massive number of mobile devices and all of the data that comes with it, so having the capability to advertise on those devices becomes a key way for Verizon to make more money. Millennial brings expertise in mobile that AOL doesn’t have yet.

5. The Microsoft angle?

The acquisition talk involves yet another big tech player. AOL recently reached a deal to take over part of Microsoft’s display ad business. That business involves the ads that appear on Xbox, Skype and other products. With the new influx of ad business, the initial TechCrunch piece posited the idea that AOL needs more technology to keep up.