Re-Examining Verizon-Yahoo Deal in Light of New Evidence
Seeking life outside the carrier market
Verizon (VZ) sought to drop nearly ~$1 billion from Yahoo’s price tag. However, Yahoo only allowed it a $350.0 million discount on the agreed-upon $4.8 billion buyout price. Altaba, which is what will remain of the present-day Yahoo after the sale of core operations to Verizon, also agreed to deal with legal claims that may arise from the two large-scale cyber attacks on Yahoo’s system.
No doubt Verizon is getting Yahoo at a decent discount, but whether or not it deserves it is a different story. What is Yahoo bringing to Verizon’s table considering that the company is seeking a new life outside its core phone carrier industry?
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Eye on digital advertising dollars
Yahoo combined with AOL could draw significant advertising revenue for Verizon. If recent press reports covering advertising executives’ comments are anything to go by, platforms like AOL, Amazon (AMZN), Yelp (YELP), and Snap (SNAP) could see a dramatic increase in ad spending flowing into them. It turns out that large ad spenders want to undo the dominance of Google and Facebook (FB) in the online advertising industry. Thus, they are willing to spend more on smaller platforms to make them stronger challengers to Google and Facebook with hopes that doing so would weaken the Google-Facebook duopoly.
More than $335.0 billion is expected to be spent on digital advertising globally by 2020, up from $194.6 billion in 2016, according to eMarketer. Google and Facebook combined control more than half of the market.
Leveraging AOL and Yahoo’s ad technologies
If marketers pour more money into smaller advertising platforms, then Verizon could benefit immensely from the shift by leveraging the rich user data and powerful advertising technologies that AOL and Yahoo are bringing to the table.