Dive Brief:
- Verizon’s $4.83 billion acquisition of Yahoo didn't just give the telecom company Yahoo's core internet assets—it also includes the Yahoo brand, name, purple color and iconic exclamation point, according to TechCrunch. After the deal is complete, the remaining assets of the company formerly known as Yahoo will have to rebrand and become a new registered and publicly-traded company.
- AOL CEO Tim Armstrong has lofty ambitions for Verizon's digital media business, stating that the goal is to reach two billion users by 2020 and compete with Google and Facebook. AOL right now has somewhere around one billion users, according to the CEO.
- It's not yet clear how AOL and Yahoo—two once-strong internet businesses in their own right—will be integrated, but Armstrong summed up his take in just four words: "Don't touch the brands."
Dive Insight:
The Yahoo acquisition is part of Verizon's strategy to grow a digital media emprie to match its existing mobile user base. AOL CEO Tim Armstrong seems to suggest that the Yahoo brand will remain after the deal is complete.
“We promised you a year ago that AOL and Verizon would aggressively work to build a mobile media company capable of touching billions of consumers and becoming one of the top companies in the world in the digital media industry," Armstrong wrote in a memo to employees. "Today, we are delivering on that promise. This morning, Verizon is announcing our intent to acquire Yahoo, one of the most powerful and largest scaled digital brands in the world.”
The combined companies would represent the third biggest player in the digital advertising market, behind Google and Facebook. Armstrong alluded to the company's ambitions, suggesting that they want to reach the scale of Google and Facebook, which dominate the market. According to Mary Meeker, Google and Facebook accounted for 76% of all U.S. internet advertising spend in 2015.
“If you want to play in the Olympics, you have to compete against Google and Facebook,” Armstrong said at a company meeting following the acquisition.
The AOL CEO said in an internal memo that current Yahoo CEO Marissa Mayer and her team will remain in place through the completion of the acquisition. Armstrong hopes she stays on past that time but that Mayer “wants to see what the strategy and structure will be.”
Armstrong also noted that Verizon is still trying to integrate Microsoft’s advertising business, so the Yahoo purchase adds another layer of complexity to the overall process of growing Verizon's digital media empire out of AOL and Yahoo.
