Verizon builds a digital advertising empire: buy Yahoo or make up for it
When AOL CEO Tim Armstrong appeared at a technology event in Las Vegas in January, he met with a large number of advertising buyers in his hotel suite.
"Data is the oil of the mobile economy," Armstrong, 45, told the conference, according to people familiar with the matter. "
Imagine, he said, that if a hotel chain provided Verizon with a frequent-ticket database, it could match Verizon's more than 100 million wireless users and AOL's own data to send targeted promotions to those customers. Subsequently, the hotel's sales data and the telecommunications giant's customer data can also be used to refer to each other, and ultimately determine how many people stay at the hotel regularly.
AOL won't be able to do so until later this year, but that reflects Armstrong's ambitions. He told Advertiser in Las Vegas that he wants to build a top mobile media company by 2020, increasing its user base from 700 million today to 2 billion and generating annual revenue of $10 billion to $20 billion, according to people familiar with the matter.
It's a feat. AOL generated about $2.7 billion in revenue last year, according to News Street Research. According to eMarketer, a market research firm, the company's mobile advertising market share is not yet among the top 10 in the industry.
If Verizon buys Yahoo's core business, Armstrong's ambitious plans will be more secure. The internet company has asked potential bidders to submit preliminary bids by April 11. Verizon is not only rich, but also has high expectations for the digital advertising industry. People familiar with the matter said the company had become Yahoo's main bidder.
Buying Yahoo may not help Verizon get to the top of the industry. Yahoo's share of the U.S. mobile advertising market this year is just 2.4 percent, down from 33 percent in 2014, according to eMarketer, while Alphabet's Google and Facebook together account for 50 percent of the $43.6 billion market. However, Yahoo could bring in a huge number of users, with 1bn monthly users, 600m of whom come from mobile devices.
"Verizon and AOL need to have a strong asset if they are to challenge Facebook and Google." "You need to do a lot to stay relevant, and Yahoo can help you get there," said Robert Peck, managing director and Internet equity analyst at SunTrust Robinson. "
Verizon's wireless data will be at the heart of these measures. Some AOL customers have been involved in technical testing, using mobile phone users' targeting data to determine whether they saw an ad and entered the appropriate brand stores.
After Verizon's merger with Yahoo, Armstrong will be in charge of digital media assets, while Yahoo CEO Marissa Mayer will be fired, according to people familiar with the matter. The two executives, who were Google colleagues years ago, have achieved remarkable results in the technology industry.
Now, Mayer is trying to keep his job as Yahoo sells, and Mr. Strong is leading Verizon's acquisition of Yahoo. Mayer's critics argue that she has failed to build a good relationship with Madison Avenue, and advertising executives have praised Armstrong for that. He once sent his own private jet to Denver to pick up an advertising executive who was ill during a trip.
Yahoo declined to comment.
Armstrong became AOL's CEO in 2009, and media executives generally believe he helpedTime WarnerThe division transformed AOL and eventually attracted Verizon's $4.4 billion acquisition last summer.
"Don't forget, AOL has been caught in a death spiral." Wenda Harris, president and COO of MediaLink, a media and advertising consultancy, said.
During his tenure at AOL, Armstrong shifted the company's focus from content, which he bought for $315 million in 2011 for the Huffington Post, to strategies around advertising technology.
Some clients and his former and current colleagues have criticized him for his emotional instability and indecision in the decision-making process.
Within Verizon, Armstrong has impressed. He is in charge of Verizon's digital media services division, which brings together the company's video and advertising businesses, including a mobile video app called go90. Although the report was made to Marni Walden, Verizon's president of product innovation and new business, rather than ceo Lowell McAdam, Armstrong remains a key part of the company's management.
"He leads AOL that is critical to helping us do business." Jim Grace, Verizon's chief communications officer, said.
Mr. Armstrong would receive about $59 million in bonuses if he served four years at Verizon, regulatory documents show.
Some Verizon insiders even think he could be McAdam's successor. "I think the only reason he stayed was the opportunity to manage the whole company." A former Verizon executive said.
Source: Sina Science and Technology Book
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