Post Acquisition: Verizon Will Use Yahoo To Rival Facebook and Google


AOL CEO, Tim Armstrong has stated that the Yahoo deal will help Verizon rise to become an advertising player in the big leagues, reports CNBC.

According to Armstrong, the combined power of Yahoo and AOL could be the boost that Verizon Communications needs to become a powerhouse in digital advertising, an arena currently dominated by Google and Facebook.

Trying to do what Google and Facebook does is not a good strategy. We’re the up and comer, we have to have a differentiated performance. – Tim Armstrong, AOL CEO.

Verizon confirmed its $4.8 billion acquisition of Yahoo yesterday in a statement that also stated that Yahoo will be integrated with AOL under the leadership of Marni Walden, executive VP of product innovation and new businesses at Verizon.

Armstrong comments that Google’s power is based on search capabilities, and Facebook’s power is of course, social media. Verizon needs a niche of its own, and Armstrong points out that the company’s strength is in building a house of brands. Regardless, this acquisition could potentially help Verizon in three key ways:

  • Yahoo’s one billion active user base, including 600 million monthly active mobile users will be folded into Verizon’s portfolio. The company will hereby be granted access to online behavioral data on those existing consumers
  • Verizon will also have the ability to place advertising on Yahoo Finance and Yahoo Sports, some of the most trafficked destinations online
  • Yahoo user data could be combined with insights from Verizon’s mobile, internet and cable customers. The access to this information will help power Verizon’s ad technology platforms. It will be able to utilize consumer behavior to determine what kinds of ads to display.

The more access to customer data Verizon has, through cable boxes or mobile, the more targeted it can be with advertising and sponsored content or product placements. – Shar VanBoskirk, Forrester Research  Analyst.

To skeptics online who are underplaying the deal, it is important to remember that under Yahoo includes Flickr and Tumblr, all these sites provide registered user data, which in turn can be used to serve more lucrative ads.

AOL’s programmatic ad platform, One by AOL was one of the main driving forces behind Verizon’s decision to acquire the company. With the acquisition of Yahoo, Verizon will further boost its position with Yahoo’s programmatic video platform, BrightRoll and mobile analytics firm, Flurry.

The deal did not include Yahoo’s Asian assets, including its Alibaba Group Holding stake – it owns 15% of the ecommerce giant, or 35.5% stake in Yahoo Japan. Those assets will continue to be held by Yahoo, but the names will change when the deal closes.

A version of this appeared in CNBC on July 26. Read the full version here.