Verizon is bowing out of media after years of trying to build a digital advertising colossus to challenge the USA’s adverts duopoly.
In a $5bn sale to private equity giant Apollo Global Management, the US operator is selling all its Verizon Media brands – including assets associated with Yahoo and AOL, as well as the advanced advertising business created jointly by Yahoo and AOL.
The new business – of which Verizon will still own 10% – will be called Yahoo. Yahoo is a brand that has been stripped of all identity through years of changes, so the decision not to not spin up something new and fresh seems peculiar. But on the other hand, keeping a widely recognized brand name could be Apollo’s way of delicately handling these assets after years of brand abuse.
As a quick reminder, Verizon has splurged some $10bn on a bunch of Internet assets that were already way past their prime, including AOL in 2015 and Yahoo in 2017. These assets then enjoyed a brief spell living under the brand name Oath, which began being phased out in late 2018 after Verizon announced it would write down these assets by $4.6bn (around half the value at the time), before Verizon Media was eventually created to provide a bit of clarity and direction for a business that was looking increasingly lost.
Verizon has made a number of changes to its ad tech businesses since the capitulation of its Oath division that prompted a comprehensive five-year review – taking three years to decide that wrapping everything media up into a 90% sale was the best course of action.
The latest move by the renamed Verizon Media arm came in April 2020 with the launch of Smart Prebid, a server-side ad integration that optimizes the order of bidding in publishers’ favor, as well as 4K HDR broadcasts and the promise of sub-second latency in live streaming.
Today, Verizon Media and its affiliates reach nearly 900m monthly active users worldwide, through customers and brands including HuffPost, Engadget, TechCrunch, as well as the News, Mail, Entertainment, and Sports brands associated with Yahoo, and not forgetting AOL.com.
Looking forward, Verizon’s press release is so fully focused on the potential for growth in the advertising business, talking about growing Verizon Media’s full-stack ad platform to capitalize on post-pandemic revenue opportunities, that it leaves no room for comment on Verizon Media’s other technological responsibilities, which includes a content distribution network (CDN) platform, security, and user experience (UX) development.
Meanwhile, the research arm of Verizon Media is where the really interesting stuff is happening, applying ML and AI to areas such as object recognition, augmented reality, visual aesthetics, natural language understanding, personalization, and content understanding. There is a wealth of data science activities going on at Verizon Media and Yahoo, hitting on some important potential growth areas that could complement the core advertising business.
One of Verizon Media’s more recent developments is a sociable VR experience, which is being created in partnership with sports gambling outfit Entain, to enable live sports betting in an immersive environment.
On the content delivery side of the business, Verizon Media has developed a platform based on Quick UDP Internet Connections (QUIC) to enable maximum web performance speed and security. Its CDN portfolio boasts intelligent load balancing and strategically placed caching servers at carrier interconnections points to provide delivery services to remote geographies by peering with those same carriers.
Apollo Global Management was for a long time the frontrunner to acquire DirecTV. Initially, we had assumed that TPG had simply came out with a better offer for the satellite TV business, although now we are thinking that Apollo’s head was turned to a very different flavor of US operator assets with greater potential for recovery as the advertising market rises from the ashes stronger than before.