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Under Verizon, AOL’s Tim Armstrong Sees Massive Growth for Mobile Media, Ads

AOL CEO Tim Armstrong believes mobile is going to “rip through the Internet and traditional media,” poised for astronomical growth over the next three decades.

Not coincidentally, AOL is now owned by the biggest U.S. wireless carrier: Verizon Communications, which bought AOL last year in a $4.4 billion deal.

“I thought the Internet was the biggest thing to ever happen in my lifetime,” said Armstrong, speaking Monday at the MPA’s American Magazine Media Conference in New York. “I think mobile will dwarf that.”

Armstrong, a former top Google exec who took over the reins at AOL in 2009, said that AOL had identified data, video, mobile, openness and talent as the five key vectors for the future of the company prior to the Verizon deal. He said Google and Facebook scored highest in terms of companies for AOL to partner with, but that Verizon came in No. 3.

“From where I sit, the phone is a machine – and Verizon has a lot of machines, 100 million of them,” he said. Traditional media companies, he added, didn’t float to the top in AOL’s analysis because most of them were missing mobile and data capabilities.

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Verizon last fall launched Go90, a free, ad-supported video service, which the telco’s execs have said will be unprofitable for at least the next two years. Armstrong said AOL will continue to invest in media brands but is particularly focused on improving advertising on mobile platforms.

AOL is developing “reverse commerce” capabilities, based on privacy-protected usage data that Verizon gathers from all the apps on its users’ wireless phones, that will proactively suggest location-based products and services. For example, a mobile service might suggest the top restaurants in a city where someone has just landed.

“Advertising, just because it’s worked the same way it’s worked for the last 100 years, doesn’t mean that’s the way it will work in the future,” Armstrong said.

AOL also is testing a way to display consumer ratings about ads – so users can see how many other people think an ad is great or if it “stinks,” Armstrong said. That transparency will help AOL and the industry fight against ad-blockers, he added.

“Some advertisers will put up a piece of creative and run it 20 million times,” he said. “Consumers aren’t stupid. They notice that, and it’s really damaging.”

The regular cadence of mobile innovations from the likes of AOL, Facebook and Snapchat is just beginning, Armstrong said, with billions more people set to become connected on mobile in the next few years. The exec, who appeared on stage after Snapchat CEO Evan Spiegel, praised Snapchat’s live stories feature.

“I’m a New England Patriots fan… and you feel like you’re at the game” using Snapchat, he said, adding, “If TV doesn’t iterate and change, a product like Snapchat will reduce my viewing of television.” (Armstrong claimed he already doesn’t watch much TV.)

Armstrong was interviewed at the conference by Fortune editor Alan Murray, who asked about his interest in Yahoo. Armstrong declined to comment on Yahoo specifically, saying AOL and Verizon have a list of companies they are interested in partnering with through 2020. Yahoo, which is reportedly preparing to reveal a plan to cut up to 15% of its workforce, has been rumored to be an AOL takeover candidates for years.

As far as Armstrong’s future at AOL, he said he had committed to be around for at least the next three years. “I’m really interested to see the future of media for mobile,” he said. He added that because he doesn’t have to report quarterly earnings to Wall Street, “I now have 40% of my time back.”

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