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What is Verizon Getting From Yahoo?


Recently, Verizon went forward with its bid to purchase Yahoo at a now discounted price. Verizon is purchasing Yahoo mainly to gain more exposure in the digital advertising space. With both AOL and Yahoo under them, Verizon will control roughly 2% of the online advertising market, according to the Wall Street Journal. The acquisition will undoubtedly add to their top and bottom line, but what other value does Verizon see in Yahoo?

The ultimate direction is to integrate Yahoo’s advertising technology into AOL’s business model and capitalize on Yahoo’s broad base of websites, but it is still unclear how two struggling internet businesses are better than one. Verizon so far has not seen to much progress in AOL since their purchase in 2015. Generally speaking, both sites appeal to an older demographic. This means that new user growth needs to accelerate just to maintain the user-base. Converting the younger audience to using Yahoo or AOL for any number of tasks will be extremely difficult in a market with such dominant players. Growing both Yahoo and AOL could prove to be more expensive and tedious than the market thinks.


Verizon ultimately purchased both of these companies to help with their stagnant growth, but in the end they could prove to be more trouble than they are worth. The acquisition sets market expectations for marginal growth in the future. If Yahoo hits any speed bumps in the process, the market will be quick to negatively react, creating an uphill battle for Verizon’s share price.  

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