Why Verizon Wants Yahoo
Marni Walden says it’s all about increasing the size of its audience
With the purchase of Yahoo Inc.’s Internet business, Verizon Communications Inc. is gearing up for a future in which owning a vast broadband data network is not enough. Verizon is making a big bet that in order to prosper, it must control much of the content that flows across its network — news, entertainment offerings, and above all advertising. The success of this deal is a marketer’s dream.
That’s the logic behind the $4.83 billion deal. But it’s far from obvious that Verizon can make it work. There can be many advantages for Verizon should the deal come to fruition. In fact, they could attract a new audience of millennials and track their millions of Verizon Wireless users to see which Yahoo sites they visit. With this data, Verizon could create a detailed profile of each customer’s lifestyle and buying habits. Advertisers and marketers could use those profiles to deliver more effective, personalized commercials, and Verizon could charge higher rates for them.
Verizon must master content as well as networking if it’s to keep growing. That is because the US Internet market is approaching saturation. Thus, the only way you can increase revenue is to increase services, especially advertising.
Verizon’s biggest competitors, such as AT&T Inc. and Comcast Corp., are already major content producers, mainly in the form of TV and movie production. Comcast owns NBCUniversal, a major movie and TV studio, while AT&T produces original TV programs for its U-Verse cable network and DirecTV satellite service.
Apart from video, Yahoo has plenty of appealing content, including popular e-mail, news, entertainment features, and their extremely popular fantasy sports apps, but they need a unifying theme. Something that perhaps Verizon can make happen.
And despite Yahoo’s struggles, it still commands a vast audience. The company estimates the various Yahoo channels draw one billion unique users per month worldwide — about 200 million in the United States alone. Yahoo is America’s third-most-popular Internet destination, after Google and Facebook.
WSJ Article: Why Verizon Wants Yahoo
Blog posted by: Ally M.