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With Yahoo buy, Verizon hopes to stay competitive in digital ad market

Matt Hamblen | July 26, 2016
But analysts question how easily Yahoo will be integrated into Verizon

Also, the adoption of ad blockers has put the ad-supported business model "at risk," a factor that will hit Verizon as hard as any company, he said.

The history of integrating a weak company into a newcomer in the space doesn't bode well for Verizon, argued John Colley, a professor at the U.K.-based Warwick Business School and a researcher on large takeovers. "Unfortunately, alliances of the weak — in an attempt to make a single strong competitor — very rarely work," he said. "They are usually left with a bigger 'weak' player.

"Yahoo has struggled to gain traction and recent results have been particularly disappointing," Colley added. "Why should Verizon and the addition of AOL change that?"

Colley argued that for Verizon, the acquisition of Yahoo is "quite a major diversification from mobile telecommunications, and it is not clear what benefits may arise from owning both as they are such different businesses … Integration is frequently blamed for botched acquisitions which destroy value. Loss of market share and key personnel during the integration process have become the norm. Competitors use the opportunity to move in on customers and staff alike. Integration is a major internal distraction for staff who are wondering what the future holds for them. Effectiveness collapses and the business suffers. There are few exceptions."

walden marni verizon 

Marni Walden, executive vice president and president of product innovation and new business, will oversee AOL and Yahoo at Verizon. AOL CEO Tim Armstrong will continue to report to her and lead the integration of AOL and Yahoo at Verizon.

Yahoo will be integrated with AOL at Verizon under Marni Walden, executive vice president and president of the Product Innovation and New Businesses organization at Verizon. Walden was named to the post, which includes oversight of internet of things as well as digital media and telematics, in early 2015. AOL CEO Tim Armstrong will continue in his position and will continue to report to Walden, a spokesman said. Armstrong will lead the integration of Yahoo and AOL.

Previously, Walden was chief operating officer for Verizon Wireless, under the Verizon Communications umbrella. Verizon Wireless has 112.6 million customers.

Make Yahoo relevant again

Walden and Verizon's "first order of business will be to get Yahoo relevant again and make current Yahoo users happy and willing to stay," said Jack Gold, an analyst at J. Gold Associates and occasional columnist for Computerworld.

"If Verizon can't stem the flow of people unhappy with Yahoo and continuing to move to other places, especially Google, then the number of eyes Verizon is buying will shrink and potentially substantially," he added. "Stemming the exodus is key, then they can work on getting more subscribers."

 

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