• by Sloan Gaon , July 28, 2016

Let’s face it: Our industry is no stranger to consolidation. With most, the desired outcome is about achieving more scale, leverage and efficiency. Unfortunately, we can’t say the same thing about the recently announced deal for Verizon’s AOL unit to acquire Yahoo’s Internet assets. Many may be scratching their heads and wondering what to make of a merger resulting in a cluster of disparate ad technologies, multiple brands and similar products.

This merger is no game-changer. No innovative product or avant-garde business will emerge from this overlapping conglomerate. If Verizon/AOL acts swiftly and decisively, then, and only then, will it have a shot at scaling up and competing with Google and Facebook.

Here are three steps Verizon should take so it doesn’t end up going overboard:

Consolidate all first-party data. Audience data is the quintessence of our industry. Knowledge about a user makes the difference between a 50-cent versus five-dollar CPM.

But data is only valuable if easily accessible and understandable by advertisers. Therein lies the difficulty: both Yahoo and AOL have tons of hugely valuable user data, but it’s hidden behind walled gardens and siloed across media properties.

Verizon needs to use Yahoo and AOL to position itself as the go-to source for cross-platform first-party data, especially in an era of programmatic transacting and growing mobile adoption. To do this, Verizon must aggregate its audience data into a single data-management platform, sync up its cookie pools across apps and platforms, execute audience extension at a massive scale, and open its data firehose to advertisers willing to pay for it.

Verizon then has to reconcile ad-technology stacks in a way neither AOL nor Yahoo has done previously. Start with the ad-server side, video and mobile assets, and combine them into one seamless platform.

Surf the 5G wave. With 5G coming, it’s time for Verizon to leverage AOL’s and Yahoo’s content assets and accelerate the Go90 streaming product. Facebook and YouTube are currently giving Verizon a run for its money, but with Verizon controlling the pipes, it has the unique ability to build a competitive service.  

Also, give people what they want: robust content. Do a deal with Netflix and offer Verizon customers an unbundled offering. This could impact Fios, but without something like it, Verizon could be left behind while competitors sail ahead.

Kill the Yahoo brand. Or be bold and form one new brand to reinvent online communication.

Verizon and AOL leadership have been working on combining their companies for the past year, and that will have to be redone. AOL has repositioned its brand well over the last few years, but Yahoo hasn’t. Both cannot continue. This might be the perfect time to rebrand entirely.

Verizon now owns dozens of email platforms, messengers and communication tools. Unfortunately, Facebook’s WhatsApp and Messenger are going to kill that business sooner rather than later. Why not use this consolidation to create a large-scale messaging platform eliminating barriers and costs for millions globally?  Plus, the data sets gathered in the Dark Web from this platform will more than outweigh the revenue loss in the short term.

Finally: I get it. Verizon is a public company with a $227 billion market cap, and Wall Street is unforgiving. But let’s acknowledge its mobile and cable franchises have many leaks, due to market saturation and the rise in cord-cutting. These are vital areas of the business that need to be patched up, or else Verizon risks having its market value sink.

Verizon, be bold in your thinking. Time’s not on your side.