Can Time Warner's (NYSE:TWX) AOL make a go of mobile marketing? Rumors of a potential acquisition suggest it plans to try.
News agencies have reported that AOL is in talks to buy Third Screen Media, which provides advertising solutions for mobile phones. The Wall Street Journal originally broke the story, pegging the deal's value as high as $80 million, though negotiations could still fall through. Microsoft's (NASDAQ:MSFT) MSN also talked to Third Screen Media in the past, but no deal resulted.
Third Screen Media makes software that incorporates banner ads into mobile devices' screens. If AOL did purchase the company, it'd be a logical complement to AOL's Advertising.com unit (which Time Warner purchased several years ago at a much steeper price tag).
As people increasingly use their mobile devices for Internet search, maps, and video viewing, it makes sense that such devices could be a new, lucrative frontier for advertisers as well.
Then again, let's not forget AOL's formidable competition. Google's (NASDAQ:GOOG) the king in targeted advertising on the Internet, and the company's leadership seems well aware of the financial potential of content -- and advertising -- on cell phones. Yahoo! (NASDAQ:YHOO) also recently touted its Yahoo! Go 2.0 beta, with its own mobile search service, and doubtlessly ads to follow.
Time Warner may be a vast media conglomerate, but investors keep a shrewd eye on AOL's every move. Ever since the company tore down AOL's subscriber walls to invite more Internet traffic -- and more advertising dollars -- we've all been curious about the strategy shift's success. Buying Third Screen Media would have to pay off to gain investors' approval.
Given AOL's serious competition, I suppose it would be negligent to ignore the potential of the mobile advertising market. However, I can see how Time Warner shareholders might hope that if it does snap up a company like this, it's able to get some first-mover advantage on Internet rivals with similar ideas. Furthermore, there's always the risk that too many far-flung acquisitions could blur Time Warner's overall focus. Fools, stay tuned to see what happens as the mobile ad market heats up.
For related Foolishness, see the following articles:
- Check out Time Warner's most recent quarter.
- If you'd rather review 2006, click here.
- Flash back to AOL's acquisition of Advertising.com.
Time Warner and Yahoo! are Motley Fool Stock Advisor recommendations. Microsoft has been selected as a Motley Fool Inside Value pick. Try any of our Foolish newsletters free for 30 days.
Alyce Lomax does not own shares of any of the companies mentioned.
