Tim Mahlman, AOL Platforms president, is a week into his new job, and sat down with The Drum on the first anniversary of the completion of his outfit’s takeover by US telco Verizon Wireless at Cannes Lions. Below he gives an insight into how it is leveraging this relationship to disrupt the status quo, and truly take telco global.

Mahlman’s role is a new one, signifying the first time AOL has an employee specifically overseeing its platforms division, with the newly appointed president tasked with ‘simplifying the story’ of its buy- and sell-side in order to create more opportunity.

He explains that his “charter” is to build on the three founding pillars of AOL Platforms’ offering (mobile video and data) pointing out that June 23 marks the first anniversary of AOL’s takeover by US telco Verizon Wireless, which was quickly followed by the purchase of Millennial Media.

AOL one year on from its Verizon takeover

“Mobile is the backbone of our infrastructure as we continue to grow, and mobile and video obviously play together very well,” he says. “What really rounds those two out is data — and when you look at the AOL data stack, that’s what allows us to separate from the competition. Our relationship with our parent company Verizon gives us the ability to deterministically target users, and we don’t have to rely on probablistic [targeting methods].”

AOL Platforms is now able to use information such as Verizon Wireless user IDs and billing information to offer advertisers a better guarantee that it can target the audiences they are trying to sell to.

“Most companies don’t have the capability to use deterministic data,” he explains, adding that the relationship with Verizon puts AOL on course to rival Facebook and Google’s hegemony of targeted online advertising.

'Authenticated data'

Online media owners use logged-in account information to help advertisers target audiences across screens, but Mahlman maintains that AOL’s relationship with Verizon could provide brands with even more assurances.

“Our data is of even greater value because it is authenticated. These are actual users that we know, with credit cards that they are using every month to pay for [telecoms] services, every month,” says Mahlman. “Although I would like to add that Verizon has gone above and beyond doing everything it can to respect users’ privacy.

Building this targeting capability has been foremost at the efforts of AOL over the last 12 months, and it is currently in the process of launching beta tests to measure just how accurately it can target audiences, while remaining within privacy regulations.

Balancing targeting capability and privacy

“First and foremost, Verizon is about its users. We say ‘users versus audience’, we know them, and they are clients of Verizon, and the data comes into AOL’s data management platform and goes through the obfuscation process — so we don’t personally identify any of these users, we relay the segments that Verizon has given us [to advertisers],” he explains. “Privacy is number one, and that’s why it has taken so long to get this in place. We want to get it right before we go to market.”

With 141 million-plus subscribers, Verizon Wireless (ergo the equivalent number of deterministic user IDs) has a huge presence in the US, but just how does AOL intend to leverage this relationship on an international basis? As a big a number as this is, it is still dwarfed by Facebook’s 1.5 billion (and Google’s even bigger) sized audience.

Seeking global data partnerships

“That’s phase two of how we work with Verizon,” says Mahlman. “Right now we’re reaching out to other authenticated data partners, and have them participate. Therefore, we can go to companies abroad, leveraging this type of platform that Verizon has built. They can then leverage my demand-side platform [DSP], and have them be in a participant in it. That allows us to have this global thinking, and how we can look at Verizon beyond the United States.”

Mahlman’s remit runs across 22 countries across the globe, and at the moment they are exploring the options of partnering with such “authenticated data partners”, these could include companies such as other telcos.

“That will then help a lot of these clients come on board. A lot of them are leaning in because they know they’re sitting on board a huge amount of data, and they’re still figuring out how best to use it, what’s the best technology to do so,” he adds.

For Mahlaman, “AOL already has this done”, and its tech stack is almost ready to be deployed at scale. Once the correct assortment of data providers are in place, they can look towards numbers that can seriously rival the hegemony of Facebook and Google in the online advertising world (provided it can strike said agreements with such international data partners).

Will ‘open relationships’ prevail over the ‘walled gardens’?

This has been a key point of differentiation that AOL has been keen to amplify at this year’s Cannes Lions. A prominently placed banner adorning the entrance to Palais du Festival (pictured) urges passersby to explore the alternative to such walled gardens (the pros and cons of which can be read here).

The view of the biggest media buyer in the market

Speaking separately with The Drum at Cannes Lions, David Proctor, president of media buying giant Group M, said: “With walled gardens, we obviously worry about them. As a company we obviously set our stall out so we can see over all of them. To torture the analogy, if you have a tall enough ladder to look over all of them, and get a clearer point-of-view for a client.

“Our concerns are the big ones: the Amazons; the Apples; the Facebooks; the Googles, which are wonderfully seductive businesses, but they can trap you in their own garden.”

When asked for his opinion on AOL’s proposition to advertisers (i.e. deterministic targeting capabilities outside of a walled garden), Proctor acknowledged Facebook and Google were “close to a duopoly”, and that more plurality in the digital advertising landscape was a scenario that proves more beneficial to his company’s clients.

“It’s an ever-expanding cake [the digital media market], and there’s still time for other companies to get involved, but they have to be quick,” he says. “Choice is good, but having said that, if Facebook and Google develop and prove to be best-in-class, then we’ll beat a path to their door,” he says.

The simple market dynamics of supply-and-demand, etc., will never change in that respect, in Proctor’s opinion. Any potential rivals to Facebook and Google’s ‘duopoly’ will need to prove points of differentiation.

“Companies need to prove they have a different ways of doing things, and innovation,” he says, when quizzed on how attractive a tool such deterministic data would be to his media planners and team.

Advertisers want to see ROI, not just traffic numbers

“As long as it answers the client’s brief [which is to calculate the return-on-investment from media spend],” he says. “The degree of scrutiny around digital, and the return-on-investment [it provides] hasn’t been as strong as elsewhere. If you think about it, people measure on clicks. Getting a million clicks is great, but what’s the return-on-investment?”

Ultimately, any digital media owner (both ‘walled’ and ‘open’) will need to demonstrate how every cent spent with them helped drive a sale, if they are to remain on a media plan, says Proctor.

Specifically discussing AOL’s proposition, he says: “It’s an interesting pitch, and play. If they can get their business model right, and prove ROI at a lower capital investment [in terms of spend], then they have a great chance. The Verizon deal was a sweet one, getting it done [i.e. deploying such technologies] is the difficult bit.”

How will AOL and Verizon Wireless move ahead over the next 12 months?

Mahlman says his outfit wants to win over the likes of GroupM’s Proctor using case studies that will be the result of the earlier-mentioned case beta tests. “The will obviously be the launching pad of how we look to take this to market,” he explains.

In addition, AOL is also looking to use these customer insights to better service the creative element of the advertising industry. “We want to go beyond standard targeting,” he says.”We have a master database of authenticated, deterministic users that we can work with. We’re having conversations with Fortune 500 companies where they could ingest their data into our platform, we would then do this data matching of data [against the first-party Verizon data], and then use that as a buying vehicle across all of the marketplaces that we work with. It’s interesting how brands are starting to want to use their data to create a wider audience segment. There’s where our opportunity to help them create lookalike modeling at scale,” he says.

The scale of AOL’s challenge/opportunity

The likelihood of AOL’s success remains to be seen, although media buyers appear open to the message at least. The below forecast from eMarketer (published after the sale of AOL, but likely calculated prior to it) demonstrates the scale of the challenge it faces.