Yahoo, Verizon Form Mobile Ad Powerhouse
Mobile ad powerhouse. Those are the first words that come to mind with Monday’s news of Verizon acquiring Yahoo's operating business for $4.8 billion.
“By acquiring Yahoo, Verizon has doubled the size of its Internet advertising business,” reads an article Monday in Business Insider. “In the U.S., it will now take an estimated 4.5 percent share of the U.S. digital ad market, behind Facebook (17 percent) and Google (36 percent).”
Unlike Facebook and Google, Yahoo will be in the background as Verizon guides the move to what Target Marketing believes will be a huge mobile ad push. With Verizon’s mobile users and Yahoo’s “1 billion monthly active users — including 600 million monthly active mobile users,” according to Verizon’s announcement, there’s a lot of overlap.
Plus now, Verizon may not get the black eye it did last year with the “supercookie” brouhaha. That’s when ProPublica found Verizon’s acquisition of AOL allowed the company to track phones and “target 135 million Verizon customers on and offline, with mobile phone data linked to AOL ads,” Target Marketing reported in October 2015.
With this precedent already on the books and Microsoft’s recent acquisition of LinkedIn showing how major industry players may consider use of one product as opt-in for another (Outlook integrating LinkedIn profile data, for instance) massive mobile ad targeting from Verizon may not be far off.
PebblePost Chairman and CEO Lewis Gersh tells Target Marketing on Monday: "The digital advertising market has consolidated significantly around Google and Facebook recently, forcing second-tier online media sites to take a stand. AOL and Yahoo! together amass scale in audience, and now have to step up their game with the data and ad tools to capitalize on that audience with relevant products for their advertising customers. In terms of partnerships, increased scale should bring better terms across all partner deals that remain relevant."
“Yahoo … connects advertisers with target audiences through a streamlined advertising technology stack that combines the power of their data, content and technology,” reads Verizon’s press release about the acquisition.
Lowell McAdam, Verizon chairman and CEO, doubles down: "Just over a year ago, we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers. The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising."
Yahoo CEO Marissa Mayer’s comments seem to complement the sentiments about what appears to be a move to increasing targeted mobile ads by saying the acquisition means Yahoo can accelerate its work in “mobile, video, native advertising and social.”
AOL CEO Tim Armstrong says now, Verizon has these content brands to leverage: The Huffington Post, TechCrunch, Engadget, MAKERS and AOL.com “and market-leading programmatic platforms — including ONE by AOL, for both advertisers and publishers.”
Alluding to content marketing, Armstrong adds: "We have enormous respect for what Yahoo has accomplished: This transaction is about unleashing Yahoo's full potential, building upon our collective synergies, and strengthening and accelerating that growth. Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers."
A vendor weighs in.
"Marketers are clearly voting for Google and Facebook with their wallets,” Gersh says, “but the rise of a credible third player with 'one-stop' access to an engaged audience should be core to the approach of this combined entity that now marries Yahoo! Finance with HuffPo."
Then again, maybe not, says Monday’s U.S. News.
“In a more ambitious world,” reads the article, “Verizon could use Yahoo's search prowess as a chip for leverage, working with phone manufacturers to make it the default search engine on certain mobile phones. Unless, of course, Google or Microsoft Corp.'s … Bing want to pay up for exclusivity.”
As if to confirm that Yahoo’s search capability, still the default setting on Firefox, was an afterthought in the acquisition, Verizon’s announcement only mentions search in short lists separated by commas.
Oh, yeah. That.
Bragging about its email service may not work as well for Yahoo as it may for Microsoft.
Like its search business, Yahoo’s email service used to be a big deal. That seems to have been on the decline since 2013, when users became increasingly frustrated with the Yahoo Mail service.
In Monday’s press release from Verizon, Yahoo Mail is characterized as “one of the most popular email services globally, with approximately 225 million monthly active users.”
So Verizon can leverage this user base. However, it may help the company to remember headlines like this from December 2013 in the Los Angeles Times after users couldn’t access their email for a week: “Yahoo Mail Exec Reportedly Jokes Users Won't Leave; Users Now Leaving.”
And the WebProNews article from June 2013, saying Yahoo Mail users were unhappy with being required to switch to a new version, in which they’d have to opt out of "automated content scanning and analyzing of your communications content, which Yahoo! uses to deliver product features, relevant advertising and abuse protection."
In May 2012, comScore found Yahoo had 298 million email users, according to VentureBeat. Now, Verizon says Yahoo Mail has 225 million users and Statista’s figures show Gmail has 1 billion. Note the change for Gmail between 2012 and 2015, according to Statista.
“The sale does not include Yahoo's cash,” reads Verizon’s press release, “its shares in Alibaba Group Holdings, its shares in Yahoo Japan, Yahoo's convertible notes, certain minority investments, and Yahoo's non-core patents (called the Excalibur portfolio). These assets will continue to be held by Yahoo, which will change its name at closing and become a registered, publicly traded investment company.”
What do you think, marketers?
Please respond in the comments section below.