While this is a sad day for Yahoo – as big as Facebook and Google in its prime – it raises interesting questions about its new owner. What are Verizon’s ambitions? Beyond the talk of becoming a global media company, Verizon chief executive Lowell McAdams wants a larger share of the booming digital advertising pie. And he thinks this deal will help him. As a leading US mobile phone network, Verizon already had a wealth of data from smartphone users that it could mine. Its purchase of AOL a year ago for its programmatic advertising technology allowed it to leverage that more effectively. Yahoo, meanwhile, has struggled to build its mobile advertising business. Its appeal is that it has content.
With Yahoo, Verizon gains the Internet company’s 600 million monthly active mobile users, as well as its email service, Yahoo Finance, and Tumblr, which is popular among Millennial. So is Verizon ready to take on the likes of Google and Facebook? In 2015, these two tech behemoths claimed the largest share of the digital ad market. Whether or not Verizon can challenge that remains to be seen – but that’s certainly the idea.
Marissa Mayer, chief executive of Yahoo, said: “Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL”. In an email to staff, Ms. Mayer said she was “planning to stay“, adding: “I love Yahoo, and I believe in all of you. It’s important to me to see Yahoo into its next chapter”. However, the takeover, which is due to be completed in early 2017, raises questions about whether the Yahoo brand could disappear.
Reason behind this Gigantic Deal
Why does a mobile telecom provider want to buy the core editorial business of a faded Internet portal? The short answer is advertising. Verizon is trying to pivot its business from analog to digital. Verizon believes that a combined AOL/Yahoo would provide the digital advertising platform they need to execute their video reinvention strategy.
The thinking is that the two companies can combine to make a solid No. 3 alternative to digital advertising juggernauts Google and Facebook, which rank as the most-trafficked websites in the world. Right now, those two companies account for almost 43 percent of digital ad sales worldwide. Yahoo is at seventh place with 1.5 percent. “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,” Verizon CEO Lowell McAdam said in a statement.
Once the web’s brightest star, Yahoo saw its brand fall out of fashion as rivals like Google and Facebook entered the limelight. Since then, Yahoo’s star has slowly been flickered!
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