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AOL Lands Verizon Ads

There’s no false advertising here: AOL Inc. (NYSE: AOL) says it has landed one of its biggest deals since restructuring itself as an online advertising company. The company’s Platform-A will be the sole manager for all of Verizon Communications Inc. (NYSE: VZ)’s online ad placements and the majority of its mobile inventory as well. (See AOL Lands Verizon.)

The announcement comes as the two companies battle each other in the courtroom over, of all things, false advertising. Verizon has sued Time Warner Cable Inc. (NYSE: TWC) which is controlled by AOL’s parent Time Warner Inc. (NYSE: TWX), for running what it calls a smear campaign of ads against FiOS. (See Verizon Sues Time Warner Cable.)

While financial details have not been disclosed, the deal is key for AOL as it looks to rebrand itself as an advertising company instead of an Internet service provider.

AOL will now be responsible for selling, placing, and targeting advertisements in all of Verizon’s online inventories. In other words, AOL has won the right to sell Verizon’s advertising space to other companies that might be looking to reach Verizon customers.

This advertising space includes Verizon's online services for its FiOS and DSL customers, meaning AOL can place ads on pages where customers download music; watch movies and live sporting events; and get news. As of the end of 2007, Verizon had more than 8 million DSL and FiOS Internet customers.

The deal also includes a majority of the advertising space on Verizon's mobile Web service, which gives AOL access to 63.7 million handsets for ad placement. AOL would not specify how big that "majority" is.

In addition, AOL has the exclusive right to guarantee where among Verizon's online properties an ad will be placed. “Other companies may be able to claim that they are representing Verizon, but they cannot sell their ads with the guarantee that it will show up on Verizon’s online network,” an AOL spokesman says.

While AOL’s parent battles with Verizon on one hand and strikes deals with it on the other, it is also looking to possibly unload AOL’s online advertising business into Yahoo Inc. (Nasdaq: YHOO) in a deal that would value AOL at $10 billion. (See Yahoo Turns to Time Warner.)

Just like AOL, Yahoo is also looking to gain market share in selling online advertisements, so the Verizon deal could add to the pot.

However, many doubt that Yahoo will reach an agreement with Time Warner, believing it will instead accept the $44.6 billion Microsoft Corp. (Nasdaq: MSFT) offer that's been lingering for weeks. (See Yahoo Decision Coming Next Week?)

— Raymond McConville, Reporter, Light Reading

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