When I was 15 I went on a school exchange to Chicago. Whilst there and at a gathering at one of the US students houses, they declared they were “going online”. At that stage I had very little knowledge of what that could mean, but they sat in front of a computer, produced a disk with American Online (AOL for short) emblazoned across the front, and booted up the modem. In the 45 minutes we were “online” we didn’t achieve much. Looked at some forums, some funny content, then got back to doing more exciting things.
That was in 1995 and was at a time when AOL was at the forefront of growing Internet connectivity and use. A couple of years later and I set up my first email address, firstname.lastname@example.org. It still exists, although I have no idea what the password is.
When I entered the world of work and was managing PPC campaigns for the early financial adopters, our key partner was Overture and their prime asset was Yahoo search. We spent more with Overture in a given month than we did with Google, more than twice as much.
AOL and Yahoo are OG’s of the Internet. Many people’s first experience of being ‘online’, or their first email accounts will have been with one of these two companies. This week AOL and Yahoo have been sold by Verizon Media for $5B, having been bought for a combined $9.9B less than 6 years ago. Whilst $5B dollars is hardly loose change, it is quite a fall from grace. Especially when judged against the likes of Google, Amazon and Facebook who are juvenile in comparison yet continue to post astronomical growth figures.
Rather than focus on what went wrong, the bigger question is can they be brought back to life? The Private Equity company that bought them clearly think so, but what in reality have they bought?
Verizon Media Ad Revenue
Verizon Media, the arm of Verizon’s business sold, reporting $1.9B in revenue in the first quarter of 2021. Up more than 10% year on year. Allowing for a seasonal spike in Q4 and the return of travel advertisers they must be aiming for around $10B as a stretch target. Not too shabby even if it is not in the same ballpark as their competitors.
Verizon Media Employees
Verizon Media reports over 10,000 people are employed across its 55 offices in 24 countries. Whilst it has a heavy US bias, it’s offices have a good coverage across the globe allowing them to have on the ground representatives localised workforce which makes them a truly global prospect.
2020 statistics suggest Yahoo has 225 million email users. This seems a small number compared to Googles 1.5B but again a worthwhile user base to work with. Active email account users are important as they typically visit your site with every browser session, provide useful data on interests and purchase behaviour, and if you’re lucky dont sign out often so give you more browser based knowledge on your user base.
SimilarWeb stats suggest Yahoo.com receives between 3 and 4 Billion visits a month which is a big number. Considering there will be multiple page vies per visit that is a lot of monetisation potential. AOL.com by comparison averages 200-300M monthly visits so less than 10% of Yahoo’s total.
So combined they are looking at 4 Billion monthly visits, mostly US based, which represents a good opportunity for revenue generation.
1st Party Data
Probably the biggest factor in the purchase, is the first party data both sites hold on their email users. In light of changes in the world of tracking and cookies, holders of first party data will feel they hold a huge advantage in the future of advertising. Email providers, especially those who are publishers too, hold a great advantage in this regard. They have first party data and they can use it for anybody consuming content in their domain. So when you combine 225 million+ email accounts with 4 Billion monthly visits you have a powerful machine if you can grow it and get the advertisers on board.
What the plan is for Yahoo and AOL, only their new acquirers will know. But they have some tools in their armoury especially when it comes to 1st party data and advertising targeting in a cookie-less world. Lets see if they can once again become Internet powershouses and take on the might of Google, Facebook and Amazon.