Buying Yahoo’s operations will boost Verizon’s AOL internet business, which it bought previous year for $4.4 billion, by giving it access to Yahoo’s advertising technology tools as well as other assets such as search, mail and messenger. As Consumerist points out, the price Verizon is paying for all of the company’s Internet properties is a mere shadow of Yahoo’s peak market value of $125 billion. It will also have the ability to place advertising on some of the most trafficked destinations online, including Yahoo News and Yahoo Sports.
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Verizon faces two dominant competitors in the online advertising business: Google and Facebook.
Verizon, the No. 1 USA wireless operator, has in recent years looked to mobile video and advertising for new sources of revenue in an oversaturated mobile phone market.
Yahoo has come under pressure from shareholders angry with a downturn in the company’s performance over the past eight years as it lost out to the likes of Google and Facebook.
Verizon, which is one of the largest U.S. carriers, is facing market saturation and limited growth prospects in its traditional business. Meanwhile, Facebook and Google already have a lot of that data – Facebook through its social network, and Google through its Android phone system and popular services like maps, email and search.
For Verizon, much like its purchase of AOL, this deal represents a way for the company to enhance its advertising platform.
“It would be premature and presumptive of me to discuss what Verizon may or may not want to do”. More recently, Armstrong led Verizon’s $250.0 million acquisition of advertising specialist Millennial Media Inc.
The purchase will boost Verizon’s AOL internet business, which it bought a year ago for US$4.4 billion, as it gains access to Yahoo’s ad technology tools, BrightRoll and Flurry, and search, email and messenger assets. She pointed to a 50 percent increase in Yahoo’s total worldwide audience to more than 1 billion users, including 600 million people who now visit on mobile device, three times more than before her arrival.
What this means exactly is unclear – is she in it for the long haul or simply to oversee the sale and eventual planned merger with AOL (another Verizon owned company) before making her exit? “Yahoo humanised and popularised the Web, e-mail, search, real-time media, and more”, she said.
Ultimately, AOL’s ad-sales technology could encourage brands to spend more money across a range of Yahoo websites and apps. Lastly, Armstrong and Yahoo CEO Marissa Mayer both worked at Alphabet Inc (NASDAQ:GOOG) before moving to their current companies.
It’s no secret that Verizon has ambitions to become a major player in the online, and especially mobile, advertising market.
But eMarketer analyst Martin Utreras said the company would have to be careful not to annoy users by doing that. For example, on a hot day, Verizon could show an ad for a nearby store that sells barbecue equipment, Bieler said.
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Verizon said it would provide more detail on the strategy behind the acquisition when it announces second-quarter earnings on Tuesday.
