Targeted ads to drive mobile video business, Verizon CFO says

Reuters News
Posted: Jul 21, 2015 4:44 PM

By Malathi Nayak

NEW YORK (Reuters) - Verizon Communications Inc 's upcoming mobile video service will drive revenue with a combination of highly targeted ads, exclusive content and pay-per-view live concerts and sporting events, Chief Financial Officer Fran Shammo said in an interview on Tuesday.

Most Americans own a mobile phone and Verizon is looking at offering video content to increase data consumption on mobile devices and grow revenue. The digital video service, which it expects to release this summer, is aimed at families and younger viewers who increasingly view content on mobile devices.

The new service will be Verizon's first foray into mobile video. Companies from Netflix to Dish already offer Web-based video services, but the No. 1 U.S. wireless company has taken a different approach with an ad-supported business model and short-form programming for mobile devices.

The video service will be offered through a mobile app, and will include some free sponsored content, Shammo said.

"A sponsored data model down the road... that will generate the usage and the eyeballs that are very appealing to advertisers," Shammo added.

In June, Verizon acquired AOL Inc. for $4.4 billion, making a bet that a push into mobile video and targeted advertising can help it unlock new revenue. Shammo confirmed that the company will use its own rich trove of data on 100 million customers to target ads with the AOL technology.

"If you can accumulate customers who are very appealing to advertisers who are more apt to buy a specific product from a specific advertiser, that is more meaningful to an advertiser and they are willing to pay more dollars for that," he said, adding that Verizon would do so in a way that would not violate customer privacy.

"We have a viable 100 million (pairs of) eyeballs on a wireless network that one else can get to but us," Shammo said.

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AOL also competes with Google Inc and Facebook Inc in the business of managing and providing video ads for mobile and desktop website publishers. Verizon's data would allow it to improve targeting on behalf of those publishers as well.

Jefferies & Co analyst Mike McCormack said Verizon has a large user base to target with ads, but noted that customers generally did not like ads. Sponsored content is "more palatable," McCormack said.

Verizon has said its upcoming digital video service will offer content from the National Football League, DreamWorks Animation’s AwesomenessTV unit and Vice Media.

(Reporting by Malathi Nayak; Editing by Dan Grebler)