Yahoo’s Arranged Marriage to Verizon

By the time you read this Yahoo,  one of the Internet’s pioneers, will be gone as an independent entity, folded into Verizon’s portfolio of early internet eyeballs alongside AOL, Tech Crunch and Huffpo. Founded by Jerry Yang and Tim Koogle, two boys who thought even a much smaller internet needed a directory ( the first form of search) Yahoo has fallen victim to a much larger and more complex world in which media companies that have gone public are forced to pay back investors through monetized eyeballs. In this world, dominated by Facebook and Google, even as the third most visited site in the world, Yahoo is worth practically nothing.

Verizon, itself the victim of a changed world in which companies formerly known as telephone companies (remember voice?)  and now struggling as cellular data companies, thinks aggregating more visitors is the answer. In comparison to AT&T Verizon has made multiple efforts to diversify its revenue streams. Now it is pushing to marry audience data with its device ID (handset) targeting capability.
However, as Bloomberg says

Of course, even with AOL and Yahoo assets, Verizon has a long way to go (paywall) to catch up with the online advertising leaders. Verizon with AOL currently holds a mere 1.8% of the $69 billion digital ad market in the US. Yahoo has about 3.4%. Google and Facebook together claim about half of it. Looked at another way, though, there’s plenty of market share to steal, which can’t be said of its traditional business.

Maybe that’s true, but if you look at the two market leaders, you may notice there’s a real difference between either of them and Yahoo, and that’s a sense of community in the case of Facebook and an unequalled search capability in the case of Google. Yahoo has neither of those.

Merely aggregating more and more eyeballs just to run ads won’t work in this day and age, because eyeballs are people and not prisoners. They’ll leave without something to draw them, which is what Yahoo’s visitors have been doing.

And it’s not ad tech either that will rescue all these properties: it is content. Superior content, aimed at the market these  properties now represent –mature early internet users who are not the Snapchatters of the world–could be a driving force to grow Verizon’s properties. It would take investment in great creative, especially in original video content and superior native ads, but it can be done.

For all her technical brilliance, Marissa Mayer never understood  the core Yahoo audience. They were her parents and grandparents. Perhaps Verizon, who serviced those people with land lines 30 years ago understands them a bit better  and can keep them around and make money from them at least until they all die. Verizon is buying time to finish its own transition from a telco to whatever else it intends to be when it grows up.

So long, pioneer Yahoo; welcome to your next incarnation.