How Verizon Hopes To Grab Digital Ad Dollars with Yahoo

About 2,100 jobs are on the chopping block as Verizon prepares to combine Yahoo and AOL for a digital advertising offensive.

Yahoo's shareholders on Thursday approved the $4.5 billion sale of its key businesses to Verizon. The deal is expected to close by Tuesday. AOL and Yahoo will cut 15 percent of the 14,000 workers they now employ, or about 2,100 jobs, said a person familiar with the matter who requested not to be identified discussing the cuts.

Using Yahoo

Verizon has a simple goal in buying Yahoo's core business: It wants to challenge Google and Facebook in the huge and lucrative field of digital advertising. But Verizon faces its own challenge in doing so, given that it will be competing against a slew of other companies also looking to break in.

Verizon wants to become a strong third choice for advertisers by adding Yahoo's popular sites and billion users worldwide to its own media business, which includes AOL and Verizon's home-grown go90 video service. It can place ads on those sites, and can also combine data from visitors to those sites with AOL's ad technologies and sales teams, and possibly also personal data from Verizon mobile customers such as location and other information, in order to better target ads at individuals.

Verizon has programs that use mobile-customer data for targeted ads and may combine that with data gathered by AOL and Yahoo. Verizon says customers can choose whether to participate.

Yahoo and AOL are "positioned to do better together than apart," Pivotal Research Group analyst Brian Wieser said.

But he is setting the bar low. While Verizon talks of growth from the deal, Wieser said "not declining would be a success. Five years from now, if the combined entity were the same size as it is today, I would consider that to be successful."

The Vision

Verizon sees...

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