Why Verizon-Yahoo Merger Is A Game Changer For Online Media and Advertising?
Verizon Communications, Inc., the largest wireless communications service provider in the United States has recently acquired Yahoo and all its core internet processes for $4.83 billion. It’s been a long time since Yahoo was looking for a rightful bidder to transfer its business rights to, and with Verizon it couldn’t have been better. Verizon that currently owns online media platforms like AOL and TechCrunch will acquire Yahoo services like online content, advertising, search processes and mobile services. Verizon acquiring Yahoo will give a major boost to its stake of being among the top contenders of advertising in Silicon Valley that is currently shared by giants like Google and Facebook.
It was last year when AOL was acquired by Verizon for $4.4 billion that helped boosting of Verizon’s media and advertising businesses. Being one among the coveted telecom giants in the world, Verizon has been on the front foot always and the recent acquisitions of AOL and now Yahoo depicts the organization’s intentions of diversifying its operations and maximizing the opportunities of generating greater revenues.
Yahoo owns a suite of advertising technology much like AOL which the company has developed and acquired over the past years. All such features and specifics are deemed to fit perfectly well with what Verizon and AOL own presently. The merger would bless Verizon with a strong collection of targeted services of mobile ad-serving, strength of content and a dedicated audience by default.
The acquisition can prove to be quite fruitful as it brings more revenue from advertising pertaining to content and for Verizon it becomes easier to get substantial amount of crucial user data. This data can make targeting of their own ads and those served by others a very simple task to achieve.
The very challenges that Verizon now faces if the acquisition is approved by the regulator, requires the company’s utmost attention. Firstly, the integration of the two big companies into one would not be a cake walk and will pose many organizational and administrative challenges. Yahoo has already released their official statement stating that they have around 8,800 employees and 700 contractors. Now, if we compare, AOL has 6,800 employees. Thus, facilitating the merger of two big corporate houses with thousands of employees is not going to be a smaller thing to achieve. Second thing is that lately Yahoo has lost quite a bit of money and Verizon needs to turn Yahoo into a profitable company otherwise it can affect AOL’s overall image and business performance.
However, it is anticipated that the deal will close on early 2017 and this will mark Yahoo’s end as an operating company. This will leave Yahoo with 15 percent stake in Alibaba Group Holding Ltd and approx 35.5 percent interest in Yahoo Japan Corp. As soon as the deal closes, Verizon is expected to merge Yahoo and AOL to create a larger media subsidiary and advertising company. This will pave the way for AOL to go with all guns blazing and achieve more scale to acquire more internet and mobile users making it an advertising giant reaching out to billions of users.
Another announced merger is Dell-EMC mega-merger about which financial authorities believe that creates a tech-bubble.
Microsoft also announced that will acquire LinkedIn for $26.2 billion, so bottom line, the online advertising market will have four big players: Microsoft, Google, Facebook and Verizon.