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InContext / An inside look at the business of digital content

AOL Aims to Improve Programmatic Performance with Convertro Acquisition

May 8, 2014 | By Michelle Manafy, Editorial Director – DCN@michellemanafy
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Yesterday, in its Q1 earnings call, AOL CEO Tim Armstrong was “pleased to report another quarter of growth at AOL.” Along with growth in AOL’s platform area, video and global expansion Armstrong specifically pointed to growth in programmatic advertising as a factor in the company’s performance. His statements followed just a day after AOL purchased Convertro, a maker of attribution modeling technology, to power its Adap.tv, AdLearn Open Platform and ONE by AOL.

Seth Demsey, CTO of AOL Platforms, says that programmatic addresses many of the digital advertising industry’s inefficiencies by helping to automate buying and selling. “It is also a great revealer of waste.” According to Demsey—and AOL’s proprietary data—as much as 70% of an advertiser’s digital investment (or publisher’s revenue) “gets lost in the digital ad ecosystem to niche ad tech features masked as media.  We call this the ‘Technology Tax’ and by our estimates, it’s one of the biggest factors affecting the growth of digital investment.”

AOL’s programmatic strategy involves not only efficiency, says Demsey, but also “modeling go-forward insights. This may sound neat and tidy, but it’s actually an extremely complex problem to solve on just one screen, much less multiple screens including TV.” With the Convertro acquisition, AOL adds a new intelligence layer to its existing “proprietary optimization ‘brain’ in AdLearn to measure, attribute and optimize media across all screens programmatically.”

Starting immediately, all of AOL’s programmatic offerings will be able to leverage Convertro, so that customers “will have a 360-degree view of marketing performance across online and offline channels—with engagement, CPA and ROI of every ad unit automatically calculated.” It will also provide them with the ability to manage budgets between channels and within channels. Converto, says Demsey, “will help us make our advertiser customers smarter about how they allocate their budget, and our publisher partners smarter about what their advertiser customers deem most valuable.”

AOL agreed to acquire Convertro for a closing purchase price of approximately $101 million. This investment is certainly evidence that, as Demsey says, AOL has “doubled down on the platforms side of our business and we are not turning back.  We expect to be a long-term leading player here.”

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