Verizon's goal with Yahoo and AOL: compete with Google and Facebook in digital advertising by sharing data on its wireless customers with advertisers
David Gelles / New York Times : Tweets: @adamsingolda , @learmonth , @pt , @nytimes and @nytimesbits . See also Mediagazer Tweets: Adam Singolda / @adamsingolda : “People act like Google and Facebook have already won, but nobody owns the future.” Cc @timarmstrongaol http://www.nytimes.com/... @nytimes Michael Learmonth / @learmonth : Facebook and Google are taking 78 cents of every new digital ad dollar - @joemarchese, deep in this VZ-AOL summary http://www.nytimes.com/... Parker Thompson / @pt : Verizon: We're going to get a couple pts of ad market share from FB/Goog! FB/Goog: We're going to make data 10x faster & 10x cheaper! @nytimes : By buying Yahoo, Verizon is preparing for the day when its most important clients are advertisers, not users http://www.nytimes.com/... NYTimes Bits / @nytimesbits : There is a theme in Verizon's deals for AOL and Yahoo: The company is rethinking who its customer actually is. http://www.nytimes.com/... See also Mediagazer
Context & Ripple Effects
This closes a deal arc that ran all spring: Tim Armstrong first pitched Verizon on buying Yahoo as the core of an ad empire built to rival Facebook and Google, Verizon then outmaneuvered a Google bid for Yahoo's core business (Bloomberg reported both were circling), and now the Times lays out the actual mechanism — not content, but Verizon's wireless subscriber data flowing into Yahoo/AOL ad targeting.
The stakes are concentration itself: as Joe Marchese's figure cited in the piece puts it, Facebook and Google take 78 cents of every new digital ad dollar, which is why Verizon spent billions on two faded portals whose real value is inventory for that data.
First-order effects
- Advertisers buying Yahoo and AOL inventory immediately get access to targeting built on Verizon wireless subscriber data — the differentiator neither portal could offer on its own.
- Google and Facebook face their first scaled challenger combining carrier-grade identity data with owned media reach, attacking exactly the share-of-new-dollars dominance Marchese quantified.
Second-order effects
- Other carriers come under pressure to monetize subscriber data the same way, since Verizon has just demonstrated that network ownership is an advertising asset competitors without networks must answer.
- Sharing wireless customers' behavioral data with advertisers invites privacy scrutiny and regulator attention that Google and Facebook already face — Verizon inherits the duopoly's reputational problems along with its ambitions.
Third-order effects
- If the pattern holds, industry structure splits into data-rich platforms (networks plus portals) versus everyone else, accelerating consolidation of remaining independent media properties into telco portfolios.
- The execution risk is real: the Oath integration that followed struggled badly enough to force 2,100 mid-June layoffs, suggesting the data-plus-portals thesis may hold while the organizational vehicle fails — a distinction regulators and rivals will both be watching.
The trend: Telecom carriers are converting subscriber data into an advertising weapon, mounting the first serious structural challenge to the Google-Facebook duopoly from the network side.