Commentary

Verizon + Yahoo? It's Not So Far-Fetched

Last Thursday, Verizon signaled that it wants to acquire the beleaguered Yahoo, the same sort of move it made with AOL. So what’s in it for Verizon? 

In some ways, Verizon’s bid for Yahoo has a lot in common with its acquisition of AOL: Both brands are granddaddies of the Internet, both are content creators and both monetize their properties with advertising and sponsored content. Both sit on a treasure trove of data. While AOL had an attractive ad-tech stack, plenty of data and content properties that are proving to be assets to Verizon, Yahoo has taken pains to build a strong presence in mobile and a vast reservoir of consumer data as well. Yahoo also has amazing engineering talent.

Yahoo and AOL both have a programmatic ad business that Verizon could combine with its mobile video business to build a stronger mobile offering with content. Yahoo also has a programmatic video marketplace under the BrightRoll brand, similar to AOL's Adapt.tv offering.

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Some say that with Yahoo and AOL combined, Verizon would be able to integrate its ad-sales teams, providing advertising packages with media brands from both companies.

Mike Driscoll, CEO of Metamarkets, a platform for interactive real-time analytics, maintains that the move by Verizon signals it’s serious about creating an alternative to Facebook and Google’s walled gardens. “AOL is dedicated to building a much more open platform,” Driscoll notes.

So what’s the benefit of a Yahoo acquisition for Verizon? First, according to Driscoll,  “It’s a signal that Verizon sees its acquisition of AOL as a success.”

Also, “despite the fact that [mobile] might not be driving the top line of the business, it’s clear that Yahoo has built some strength in mobile through acquisitions and hires.” Verizon obviously has rich mobile handset data -- and the combination of mobile monetization technology and mobile handset data is a good match, he adds.

Driscoll doesn’t see the same synergy between Verizon and Google, another potential buyer. He notes that Facebook and Google’s walled-garden approaches work for advertisers because of their scale. In addition, reach is what drives advertisers to stay with providers of walled gardens—“but if advertisers can get into other places, and Verizon’s ecosystem is big enough, it could be a threat to Facebook and Google,” Driscoll said.

Driscoll drills into the issue of transparency: “Any of us who believe in the value of independent software providers in the marketing and ad ecosystem make it more likely that the various walled gardens will become open and transparent.”

For example, if Macy’s wants to run a campaign across Google, Facebook and AOL properties, the retailer is unable to understand the cross-channel reach. Today Google and Facebook don’t provide data on the unique reach between the two. “It’s a huge problem,” Driscoll explains. Advertisers want to know, “what’s the unique  reach of my campaign across channels? The walled gardens keep the data close to the vest, and it’s particularly hard to obtain mobile cross-channel data.”

Why is that the case? Driscoll says Facebook and Google claim they can’t provide the data because they’re worried about data leakage. If it’s not done properly, information about consumers could divulged. But there are ways to provide the data in a safe way, he believes.  Driscoll maintains that the real reason Facebook and Google don’t want to be open is to create a more compelling reason to shop with them. Providing cross-channel-reach data would diminish the value of what’s inside their garden.

However, as marketers grow savvier, there’s bound to be more competition.

What are the alternatives to Google and Facebook? If Verizon snaps up Yahoo, it will have access to BrightRoll, which is a fairly powerful video exchange. Currently, Verizon doesn’t have a programmatic video marketplace for video. BrightRoll is a more traditional programmatic marketplace than even AOL’s Adap.TV.

Driscoll says it's likely that Google will become a more open platform and that Facebook will remain closed. Google is also perceived as being behind Facebook in mobile progress. More people are spending more of their time on mobile devices, and Facebook appears to be the No. 1 place people are dedicating their media time to—that is, their mobile media time.

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