Earlier this week, Verizon announced the acquisition of Yahoo’s core business for $4.83 billion. This follows on the heels of the acquisition of AOL last year. These acquisitions will help accelerate Verizon’s position for more digital ad revenue streams. The combined powers of Yahoo and AOL, Verizon starts to be more competitive to the likes of Facebook and Google.
Leading to the purchase, Yahoo has been on a downward trend losing both search engine and ad revenue share. According to eMarketer:
- Yahoo’s US web search share is down to 12% in 2016 from close to 20% in 2009. The 2016 benchmarks are compared to 64% for Google, 21% for Microsoft and 1% for AOL.
- Yahoo’s US ad revenue is down to 3% share in 2016 from 10% in 2009. The 2016 benchmarks are compared to 39% for Google and 15% for Facebook.
The acquisition was focused on Yahoo’s core business and targeted to be complete in January 2017. Yahoo’s Asian properties including shares in Alibaba and Yahoo Japan will remain with Yahoo shareholders.
Highlights of the Acquisition
Expanded Network Scale and Content Distribution:
Combining the premium content distributions capabilities of AOL and Yahoo, the Verizon deals push the group to rival Facebook and Google. The deal combines Huffington Post, TechCrunch and AOL with the strong Finance, News and Sports properties of Yahoo. This puts the portfolio to more than 25 brands including Tumblr acquired by Yahoo in 2013 and Polyvore acquired last year. Yahoo’s network includes scale with 1 billion monthly active users (including 600 million monthly active mobile users).
Technology stack for ad delivery and analytics:
Yahoo’s technology stack includes several key ad delivery and analytics tools including:
- BrightRoll – Demand side platform focusing on cross channel and Yahoo exclusive inventory
- Flurry – Mobile app analytics platform
- Gemini – Paid search and native advertising management platform
In addition to the additional scale added by Yahoo’s strong monthly user numbers, the technology stack now helps Verizon better monetize and analyze traffic across the network.
Yahoo has an email network with over 225 million monthly active users. The active users help fuel scale as well as providing first party data for targeting including deterministic matching for cross-device targeting and attribution.
What does this mean?
- The expanded content delivery network gives Verizon access to more editorial content avenues.
- With over a 1 million monthly users and 225 million daily email users, Yahoo provides broader scale across the Verizon ad network.
- The technology stack will help streamline the ad delivery process. It will be interesting to see how comparable technologies integrate across the Millennial, AOL and Yahoo acquisitions, specifically looking at BrightRoll (Yahoo’s demand side platform) vs. AOP (AOL’s demand side platform).
- The future of Yahoo search still hangs in the balance. Yahoo has continued to make sizable investments into the tech behind the Gemini platform though still lagging behind the capabilities of Google Adwords or Bing Ads. Based on the recent search partner agreements between AOL/Microsoft and Google/Yahoo, it does not appear to be out of the question that Yahoo would re-evaluate the search partner relationships and go in a direction similar to AOL.
The next year as the companies integrate should be interesting. The combined scale of the portfolio provides a vehicle to be competitive with Facebook and Google, though it is going to be a tough road. The content brands under the network gives Version a unique opportunity to offer more rich custom content pieces to advertisers. To make up ground around ad revenue share, Verizon is going to have to make sizable investments in the technology stack to catch up to the progress that both Google and Facebook have made including capabilities around online to offline tracking and audience targeting. We will keep monitoring the process of the acquisition and follow-up with any insights as companies begin to merge.