Verizon will soon be officially owning Yahoo and according to analysts the Verizon’s simple goal behind buying Yahoo is that it wants to become one of the ad giants if not as big as Google and Facebook at least the third from the top.
By being able to add Yahoo’s popular sites and billion users worldwide to its own media business, which includes AOL and Verizon’s home-grown go90 video service, Verizon will be able to expand its online ad footprint substantially. Verizon will be in a commanding position as it will not only be able to place ads on all Yahoo properties, but also combine data from visitors to those sites with AOL’s ad technologies and sales teams, and possibly also personal data from Verizon mobile customers such as location and other information, in order to better target ads at individuals.
One of the mysteries still surrounding the Verizon-Yahoo deal is how does the wireless company intend to integrate mobile-customer data with the ad business. Verizon has been mum on that aspect till date.
Yahoo’s shareholders on Thursday approved the $4.5 billion sale of its key businesses to Verizon. The deal is expected to close by June 13. The combination of AOL and Yahoo will cut 15 percent of its 14,000-person workforce, or about 2,100 jobs, said a person familiar with the matter who didn’t want to be identified.
Verizon’s goal as far as Yahoo acquisition is concerned is clear. The online ad business is something that the wireless company craves for at a time when the wireless industry is seeing very nominal growth because of extensive competition in the US fueled by price cuts.
Verizon has “essentially turned into a no-growth business,” said CFRA Research’s Angelo Zino. The ad business would be a “big deal” for Verizon if it goes well, he said.
Tim Armstrong, the former Google executive who joined AOL as CEO in 2009, has for years wanted to combine AOL with the long-declining Yahoo. Although AOL has big-name properties such as HuffPost and Engadget, AOL hasn’t been as big of an online destination as Yahoo’s mail, finance, sports and other properties.
The combined business, to be called Oath, will expand its news, sports, entertainment, finance and lifestyle coverage. Like everyone else, Oath will focus on video and mobile, where consumers increasingly spend their time online. Armstrong says he wants Oath properties to be a place consumers “come and visit every day” and predicts users growing to 2 billion from 1.3 billion by 2020, with annual revenue of $10 billion to $20 billion from roughly $7 billion today.