On May 3, Verizon announced the sale of AOL and Yahoo to private equity firm Apollo Global Management.
Although Verizon retains a 10% stake in Yahoo, the sale of its media business likely ends Verizon’s push to become a dominant stakeholder in the media landscape. According to CNBC, the telecommunications conglomerate will now focus primarily on Verizon wireless networks and other internet provider businesses. The sale of AOL and Yahoo includes Verizon’s advertising technology business.
Why Is Verizon Selling AOL & Yahoo?
Although still a money maker for Verizon – Verizon Media Group, formerly Oath, “recorded $1.9 billion in sales in the first quarter, a 10% gain over last year,” according to The New York Times – the writing was on the wall that Verizon was looking to move away from media. In 2019, Verizon parted ways with Tumblr and, the following year, Verizon-owned news brand HuffPost was sold to BuzzFeed. The New York Times notes that Verizon had hoped the acquisitions of AOL and Verizon in 2015 and 2017 respectively would offer a pathway to lucrative ad sales into digital content. However, despite advances in Verizon Media’s ad tech and ecommerce, big tech rivals like Google and Facebook proved more challenging than expected when trying to penetrate digital advertising.
What’s Next For AOL & Yahoo?
The long and storied history of once marquee brands AOL and Yahoo will enter into a new chapter with Apollo, the firm that presented the best path forward for a company now just called Yahoo. “Apollo has a powerful vision that includes aggressively pursuing growth areas in commerce, content and betting. One [a strategy] that also features synergies with many of the traditional brick-and-mortar companies in [the Apollo] portfolio who can benefit from [Verizon] Media’s ecommerce platform. What made Apollo’s offer so appealing, is that it includes leveraging the entire Verizon Media ecosystem of adtech, affiliate relationships, data, insights, targeting and reach,” said Hans Vestberg, CEO of Verizon Communications. Of note, AOL, once the company that represented the new internet frontier, is no more.
What Does The Sale of AOL & Yahoo Mean For Advertisers?
Yahoo CEO Guru Gowrappan was upbeat when discussing the potential for continued growth in digital ad markets, noting “The past two quarters of double-digit growth have demonstrated our ability to transform our [the Yahoo] media ecosystem. With Apollo’s sector expertise and strategic insight, Yahoo will be well positioned to capitalize on market opportunities, media and transaction experience and continue to grow our full-stack digital advertising platform.” For advertisers who want to capitalize on the “rising tide” of ecommerce and growth in digital advertising while diversifying away from Google and Facebook, Reed Rayman, a private equity partner at Apollo, believes Yahoo will “absolutely” play a role.
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