Verizon’s $4.8 B Purchase: What’s Next for Yahoo!?

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After years of disappointing performances–and two separate dips in stock performance since mid 2015–Yahoo! has finally struck an acquisition deal with Verizon.

As we have all heard by now, the mobile giant will pick up the former search leader for $4.8 billion. Verizon gets the Yahoo! core business, as well as some real estate, but not Yahoo! Japan, Alibaba or Yahoo!’s approximately 3,000 patents, which will be auctioned separately. The question is….what’s next for Yahoo!?

Yahoo!’s Long Slide to the Bottom

Yahoo!’s been on a long march to disaster for years, a fact its leadership no longer tries to deny.

Although it was the biggest name in Internet search throughout the 1990s and the dot-com bust, by 2011, it had lost about half of its $44.6 billion valuation. But that was only the beginning of Yahoo!’s trouble. Current CEO Marissa Mayer was brought aboard to try to slow the bleed, and seemed to be doing just that with moves like her acquisition of Tumblr and redevelopment of the once indispensable Yahoo! home page and email services.

The month of July 2013 seemed to indicate that things were looking up for Yahoo! when it finally outperformed Google in number of U.S. visitors for the first time in two years. The end of 2013 would mean the doubling of Yahoo!’s market share price, but all Mayer’s hard work was too little, too late. In February of 2016, the company put itself up for sale to the highest bidder, hoping to get something out of what remained of what was once the biggest name in search.

Verizon, Yahoo!, Search and Mobile

Verizon’s purchase of Yahoo! wasn’t an isolated incident.

Verizon also recently managed to acquire what remains of AOL, whose assets include Huffington Post and Tech Crunch, as well as a mobile video app called go90. Although a combined Verizon-AOL-Yahoo! creation is still estimated to hold just a paltry 5 percent of the digital ad market, Verizon has an overarching plan for these purchases.

It’s hard to know for sure at this juncture what its play will be, especially with the price of digital ads falling due in part to the sheer abundance of ad space, but some believe that upon the finalization of the Verizon-Yahoo! deal in first quarter 2017 we’ll witness a very focused effort to bring the one-time search behemoth back to the top.

Verizon, however, has little interest in traditional search. What continues to drive its business is mobile—and this could be a very good thing for marketers and businesses everywhere. We’ve struggled for years to find a solution to the targeted mobile advertising problem and so far only Facebook managed to really even make a decent effort. Advertising to Millennials, especially, can be nearly impossible when you consider how much of their media is consumed solely on a mobile device.

Reaching the Elusive Millennials

Reaching those in this demographic and their younger siblings may be the ultimate goal of Verizon’s marriage with aging AOL and Yahoo!. If the new entity manages to successfully crack the mobile marketing code, Facebook and Google would truly have competition in that market for the first time. That’s not to say that these two giants haven’t contributed a great deal to mobile advertising, but there’s a lot left on pretty much every marketer’s wish list—and marrying a one-time master of search with one of the leaders in wireless might just be the right combination to get us closer to the platform many have been seeking for so long.

The big question, really, is whether the many apps and services run under the AOL and Yahoo! label can be taught to work together for a similar cause instead of acting as competitors, as some are currently doing, and that’s just to maintain a reasonable level of income. To become a truly dynamic force in the marketing arena is going to require Verizon-AOL-Yahoo! to go a step beyond what’s being already done and create better targeting tools for mobile advertising.

Whomever manages to make it possible for marketers to tell their mobile ads to only play for a mother of a family of four with a dog and a household income of $50K or more without the necessity of them logging into a third-party platform like Facebook will truly rule mobile advertising for the foreseeable future.

Will it be Verizon-AOL-Yahoo!? That remains to be seen, but Verizon’s cooking up something and it will certainly pay for marketers across the industry to keep an eye on this particular acquisition.

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