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Verizon Acquisition of Yahoo Gives Telco a Programmatic Trifecta

August 8th, 2016   ||    by Monta Monaco Hernon

In late July, Verizon agreed to pay $4.83 billion for Yahoo in a deal some analysts say completes the telco’s quest to build a mobile video business, monetized by advertising, and strong enough to compete with Google and Facebook.

This Verizon acquisition follows the company’s purchase of AOL, through which it gained an established programmatic player. AOL’s programmatic platform currently brings in $1.3 billion, which is a respectable 50 percent of the company’s digital ad revenue, according to TheStreet. These numbers place it behind Google, Facebook, and possibly AppNexus, but Yahoo brings one billion active monthly users to the AOL/Verizon equation, including 600 million active mobile users, and a broad content portfolio. The combination of Verizon, AOL, and Yahoo, will be a trifecta of ad-tech systems, consumer reach, and access to user data, making it easier for advertisers to personalize their messages and take advantage of the benefits of programmatic advertising.

Delivering Data

All three are important, but data is the name of the game these days with advertising buyers clamoring for information that will allow them to target their messages to personally suit the end users. Telco revenues for mobile operators have been suffering as of late, down 40 percent over the last few years for forty of the largest global operators, according to MediaPost. These companies have access to subscriber information like device location and home address and have been looking for models that allow them to utilize this data to create a new revenue stream.

Telco data is “tailor made for advertising,” said Rich Karpinski, principal analyst, mobile operator strategies, 451 Research, notes AdvertisingAge. With AOL, Verizon gained an existing ad platform that it could use to leverage its data for advertisers. Beta tests are currently underway, allowing select AOL clients access to Verizon’s Precision Market Insights (PMI) service. Data is cross-referenced to essentially follow people’s movement and measure ad success. For example, if a pizza restaurant sponsors a ballgame, PMI allows them to see what portion of the audience goes to eat there after the game and during a specific time period.

Searching for Scale

Yahoo brings additional data through its search engine, for example, but it also brings scale, which AOL CEO Tim Armstrong said was the primary reason for the acquisition. The goal of the combined entity is two billion users by 2020.

“Everybody knows (advertisers) need ad tech and that they need platforms, but everybody is circling back to the fact that those areas get so commoditized that people want premium brands and premium input even in the programmatic space so their customers stay connected,” Armstrong said.

What will things look like once the Verizon acquisition of Yahoo is complete? The Hileman Group painted a picture of the potential future that begins with the purchase of a Verizon mobile phone. Data cross-referenced between Verizon mobile, AOL, and Yahoo can be used to determine consumer interests. The mobile device can be tagged with this information, which also can be utilized across screens along with location data and type of Internet connection, to make advertising experiences both personalized and dynamic.

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