Earlier this year, AOL CEO Tim Armstrong said his ambition at parent company Verizon was to "create a major digital advertising competitor to Facebook and Google".
The acquisition of Yahoo certainly says a lot about how this ambition is likely to be realised – and it is clear that the focus is on mobile.
If we look at what Yahoo offers Verizon, it’s mainly content, data and ad tech. As well as Yahoo’s email service and core sites – finance, sports, music, and news – Verizon now also owns Flickr, Tumblr and Rivals (which for our UK audience is a network of sites dedicated to college football and basketball).
There’s also additional ad tech to supplement what it acquired from AOL – namely millennial media but also the likes of Adap.tv and Convertro – in the form of mobile app analytics tool Flurry, and video advertising company BrightRoll.
What’s interesting about Flurry is that, if properly integrated, it will add serious analytics to what it already has – the ability to place ads in front of its mobile audience. To which it has added 600 million users with Yahoo.
Martin Utreras, an analyst at eMarketer commented on the deal. He said: "What’s attractive is Yahoo’s user base — it’s very large and it’s very mobile".
This acquisition, therefore, is a real bet on the power of "addressable" mobile audiences and one that’s likely driven by the emerging opportunity of delivering both brand and direct response advertising on this channel.
Whether or not Verizon can successfully integrate the tech to reap the full rewards of having its own mobile tech stack remains to be seen but it’s clear that it sees future growth in this area of its business.
And mobile’s not a bad investment. Last year eMarketer predicted 2016 would be the year global mobile ad spend would pass the $1bn mark, with it also making up over 50% of digital spend for the first time.
Some of this growth is driven by mobile continuing to take a bigger share of digital, but we’re also seeing brand dollars usually spent on more traditional channels being allocated to mobile too.
This is in part down to second screening behaviours. Research from Yume showed that it takes less than four minutes for consumers to reach for their phones when they’re watching TV. But it’s also because of the unique environment afforded by mobile. At Widespace we often see mobile as more of a behaviour than a device.
There’s a specific way we connect with it emotionally because it simultaneously feels incredibly personal, while also acting as our constant connector to the world around us. Something that offers a huge opportunity to advertisers looking to engage consumers with their brands.
Research from Yume showed that it takes less than four minutes for consumers to reach for their phones when they’re watching TV.
But that also comes with pitfalls, because doing advertising badly on mobile is likely to irritate and alienate consumers faster than on any other channel. In this context, Verizon faces two big challenges.
The first being the successful integration all of its new ad tech, and the second being developing a tailored approach to mobile, taking into consideration context, frequency and offering ad formats that are specifically designed with a mobile user in mind.
Finally, if it wants to take on behemoths Google and Facebook, it’ll need to harness Flurry to enable brands to measure against brand metrics as well as DR – it’s something we’ve been doing for years, because if you don’t measure the full potential of mobile then the full scale of the opportunity will never be realised.