US telecoms giant, Verizon Communications,has bought Yahoo’s search and advertising operations for a deal of around $4.8bn. Verizon said the deal for Yahoo‘s core internet business, which has more than a billion active users a month, would make it a global mobile media company.
Commenting on this news, Juan Jose Rio, partner at advisory and investment group, Delta Partners, which specialises in the telecoms, media and digital space, said:
The acquisition of Yahoo by US telecoms giant, Verizon has created a new digital powerhouse overnight.
Forget the nostalgia of Yahoo being a pioneer for the first dot-com boom, this move now signals a new chapter for the company – and for Verizon they have become the cat that got the cream.
With AOL already under its belt from a prior acquisition (giving it ownership of advertising technologies, as well as publishing assets such as the Huffington Post, Techcrunch, Engadget and other news sites), Verizon is progressing its transformation to become across-screen advertising and mediagroup. This is a process that arguably started with the creation of Precision Market Insights back in 2012.
With this deal, Verizonspecifically solidifies its position in the mobile and video space, two of the highest growing verticals in digital advertising, and also two of the verticals where Verizon has been focusing the most in the recent past, with efforts such as its own mobile video service for millennials, named go90.
Through Yahoo, Verizon is harnessing a significant number of assets, including new advertising capabilities, but most relevant is its fixed and mobile advertising properties in the search, communication and digital content space. This willexpand the audience of Verizon advertisers by one billion viewers and helpreach a single-digit share of the digital advertising market.
In addition to this, and maybe the cherry on top of the pie, let’s not forget that Verizon also gets consumer and SMB services, with significant traction across online and mobile, such as fantasy sports, leading media verticals, such as automotive and finance, and communication tools (email, messaging and blogging).
Thisis the advent of the telecoms provider now emerging as a media group. And this is clearly the future strategy for Verizon:by complementing the wealth of customer insights and publishing assets it already had through its fixed, mobile and TV offer, with AOL and Yahoo now as assets, Verizon is now capable of providinga robust, end-to-end offer of advertising services for global brands.
This enables Verizon todiversify its revenue mix beyond the mature connectivity space, helping extract additional (indirect) value from its subscriber base.By leveraging its deep customer relationship across screens and range of data on usage behaviour, Verizon can build a unique proposition, opening the doors for it to compete directly with the likes of Google and Facebook.
Whilst it remains to be seen what exactly Verizon will do with this latest acquisition and all its underlying assets, including those beyond the US borders, this may lead to similar deals and acquisitions between telcos and digital companies. More deals of a similar nature may be forged in the future, with telcos looking increasingly to leverage their connectivity and data assets to become powerful digital companies.
As such, although the glory days may initially seem to be over for Yahoo, for Verizon they could just be about to start.