Where Will Verizon’s Oath Stand In The Digital Advertising Market? – Forbes

Verizon announced that it has completed its $4.5 billion acquisition of Yahoo’s internet assets. Verizon will merge Yahoo’s operations with AOL, which it acquired in 2015, creating a new subsidiary called Oath that is focused on digital media, digital advertising, online services and software. While the deal gives Verizon a relatively deep portfolio of ad tech assets and digital properties that draw an audience over over a billion users, it also comes with some challenges. Verizon has set an ambitious target of reaching a global audience of two billion users and as much as $20 billion in revenue by 2020. Below, we take a brief look at the advertising landscape and where the various players stand.

We have a price estimate of $53 for Verizon’s stock, which is about 15% ahead of the current market price.

Verizon Will Be A Distant Third In the Digital Ad Market

The digital ad market is extremely competitive, with Silicon Valley behemoths Google and Facebook holding over half the market. Research firm eMarketer estimates the two companies will generate $73.8 billion and $36.3 billion, respectively, this year in worldwide digital ad sales. Both companies have rich customer data sets as well as high engagement levels across their search, video and social media platforms. Verizon will be a distant third in the digital ad market, as it is likely to garner under $5 billion in ad sales this year after factoring in Yahoo’s business. Yahoo’s ad business has been witnessing declines ($2.83 billion in digital ad revenue in 2016, down from $3.28 billion in 2015, per eMarketer) with some of its major products losing share in their respective markets. Competition from smaller ad players could also mount. Snapchat – which has wide appeal among millennial users – has been stepping up its programmatic sales, while e-commerce behemoth Amazon has also been leveraging its massive website traffic and customer data to play a larger role in the advertising space.

Yahoo Deal Brings Verizon A Comprehensive Suite Of Ad Tech Assets

With the Yahoo acquisition, Verizon should be able to significantly bolster its advertising technology, making inroads into the search engine and native advertising markets. Yahoo’s key advertising products include its flagship Gemini – which is a self-serve platform that combines search and native ads for superior results – and BrightRoll, which offers programmatic buying and selling tools for video, display and native ads. Verizon already had access to a robust programmatic and video advertising platform via its AOL acquisition, and with the Yahoo deal completed, the company should be able to effectively augment its technology, giving it a broad spectrum of ad tech assets ranging from programmatic video and display to native advertising and search.

Verizon Could Be In a Unique Position When It Comes To Ad Targeting

Verizon could be in a unique position when it comes to ad targeting, as it combines data sets from its 1.3 billion users on various Oath properties (such as AOL, Yahoo Mail and Finance) with data from its 100 million+ wireless subscribers and its tens of millions of wireline customers. Mobile is the typically the most difficult data to collect, as traditional browser cookies that advertisers use to target customers on desktops don’t universally work on mobile phones, and Verizon should be able to partly circumvent this with data from its wireless customers. Verizon already operates a mobile advertising program that combines data ranging from a wireless user’s device type, demographic information as well as information such as location data, browsing activity, and app usage garnered from AOL’s ad services, enabling it to display targeted mobile ads to Verizon subscribers. The Yahoo acquisition could help to further the carrier’s cross-device strategy, as Verizon could follow hundreds of millions of Yahoo’s users who are logged into Yahoo services across their devices. That said, Verizon will have to walk a fine line in marrying its various data sets, as this could raise significant privacy concerns.

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