Nobody was very surprised at the announcement that Verizon would buy Yahoo for $4.83 billion a couple of weeks back. It’s a very good deal for Verizon, even though it doesn’t include the shares of Alibaba and Yahoo Japan, which account for most of Yahoo’s market cap.
There’s been plenty of discussion about how Yahoo failed: It squandered cash on acquisitions like Tumblr and was unable to exploit them. Innovation lagged as the company placed too much focus on its media holdings. And investors worried that it would cash in its highly valuable Alibaba stock and waste the money on more fruitless acquisitions.
In Verizon’s earnings conference call earlier this week, ReCode reported that the company’s chief executive (CEO) Lowell McAdams focused on how the deal would make it “a major competitor in mobile media.” That’s something that Yahoo also tried – and failed – to do, we should note.
Let’s look at this major deal from the perspective of email marketing.
A marriage of data
First, this deal is certainly not about acquiring more email users.
At the end of 2015, the AOL email client accounted for only 2.1 percent of email opens, with Yahoo Mail only slightly higher at 2.8 percent.
Apple owns this, with iPhone and iPad email opens accounting for 48.9 percent of all opens. In terms of email clients used, Litmus says that in June 2016, Apple’s iPhone and iPad clients accounted for 44.64 percent of usage. Yahoo Mail was used by 2.85 percent. AOL Mail wasn’t even on the map.
However, overall users is another story. According to TechCrunch, AOL CEO Tim Armstrong says he wants to get to 2 billion users – and Yahoo gets him there.
Scale in users is great. That’s more eyeballs for ads served via AOL technology on the plethora of media properties the combined companies own. But the depth of data alongside scale is even better. Verizon will have ownership of consumer data not only on phones and mobile devices; it will be able to pair that with consumer behavioral data from the media sites that AOL and Yahoo own.
The question is, how much smarter will Verizon become with the data it acquires? It will be able to create even richer consumer profiles while allowing marketers to reach consumers in the ways they prefer.
Email marketers specifically could be able to apply data gleaned from user behavior across a much wider array of products and services. For example, could understanding a consumer’s behavior on Flickr allow a marketer to better customize the visuals in an email campaign?
Could Tumblr behavior trigger emails inviting the recipient to access similar content – perhaps even branded content?
One barrier to doing this is the U.S. Federal Communications Commission’s (FCC) proposed net neutrality rules that would theoretically limit the type and amount of data Verizon could garner from Yahoo users. Among other things, the rules would require ISPs to get customers to opt in to data collection.
Verizon has been heavily lobbying the FCC, arguing that it should be able to follow the same consumer opt-out rules that the Federal Trade Commission applies to the Googles and Yahoos of the world.
The FCC is looking for responsibility and the ability – and willingness – to cure problems and resolve consumer issues. If Verizon can demonstrate that it intends to be a good actor, the FCC may look at the acquisition in a different light.
Digesting the giant
We can see the future of this deal in shadows of the past, that is, Verizon’s purchase of AOL slightly more than a year ago.
Acquisition and integration always happen at a snail’s pace, so we know that any changes will come slowly. But Verizon has learned quite a bit from AOL; it remains to be seen how that will translate into increased speed in assimilating the Yahoo brand.
Verizon is already switching email users from its proprietary email platform to AOL Mail, although they can keep their Verizon.net addresses. If Verizon does sunset the Yahoo Mail platform, it needs to be very careful as it migrates users.
Otherwise it risks giving consumers a reason to switch if it’s not a seamless experience for them. As email marketers, we’ll have to watch to see which client takes precedence. If Verizon also moves Yahoo users to the AOL email platform, that will make email marketing more efficient since there would be two fewer rendering engines to design for.
Verizon sees a clear path to greater exposure for its own brand. And it should move quickly, using what it’s learned to integrate AOL’s properties and the data it provides.
Let’s watch this space!