Verizon’s acquisition of Yahoo represents the latest play by telecoms to compete with Silicon Valley for online advertising dollars.
Analysts say Yahoo’s massive audience is what attracted Verizon. While Yahoo is no longer viewed as an innovator, its various websites, such as Yahoo Finance and Yahoo Sports, pull in considerable traffic – nearly 200 million unique visitors in April, according to analytics firm ComScore, surpassed only by Facebook and Google. Adding Yahoo’s sites will broaden the reach it can offer advertisers, and enhance its ability to target ads. “Verizon stands to expand their audiences significantly”, said Susan Bidel, a senior analyst at Forrester Research.
Yahoo will be combined with AOL, which Verizon purchased in 2015, to form a new media and technology division called Oath, to be headed by former AOL Chief Executive Tim Armstrong. According to Bidel, Verizon is positioning Oath as a platform for advertisers that will connect them to large user groups and provide unique data on users. This will enable more targeted advertising, based on browsing behaviours. Oath is expected to have about 1.3 billion monthly users.
Similar to AT&T’s bid to purchase Time Warner, Verizon’s $4.4 billion purchase of Yahoo also reflects a trend in the telecom industry of companies linking their networking technology with exclusive content. By purchasing Yahoo, Verizon will greatly expand its content offerings. The company gained media properties such as HuffPost and TechCrunch when it acquired AOL.
According to the New York Times, “Verizon hopes to use its range of content and new forms of advertising to attract more viewers and marketers as it competes against Google and Facebook.” Oath’s strategy will be to place the same content, consisting of articles, videos and ads, in multiple places to reach the widest possible audience, said Marni Walden, an Executive Vice President at Verizon who oversees its global media businesses. “There is a tremendous opportunity to increase viewership”, she said.
“Now that the deal is closed, we are excited to set our focus on being the best company for consumer media, and the best partner to our advertising, content and publisher partners,” Armstrong commented.
