What Will Yahoo’s Buyer Actually Get for their Money?
While the latest round of negotiations and quibbling over Yahoo’s future drags on, Marissa Mayer delivered the beleaguered media company’s latest earnings yesterday evening. As expected, most of the numbers were disappointing, with revenue declines almost across the board. While some speculate if this earnings call may be Mayer’s last, others are wondering why two major US telecom companies (among other bidders) are fighting for the chance to buy Yahoo’s core businesses for an estimated $4 billion. With Verizon and AT&T pegged as two of the top contenders, what’s actually on the table?
It’s a Numbers Game
Despite Yahoo’s declining fortunes, according to the latest Verto Analytics data, it’s still got some impressive numbers – especially when compared to Verizon and AT&T, two of the most likely buyers. Yahoo far exceeds both companies in terms of monthly users, reach, and stickiness (Verto’s metric that compares daily users to monthly users to quantify the most engaged users). Even if Yahoo ultimately only sells a portion of the company, there’s still a huge gain in reach and audience on the table.
And The Winner Is…
In the battle for Yahoo, our data points to Verizon as the best-equipped company to truly leverage Yahoo’s assets. In addition to their Yahoo bid, “Verizon has aggressively pursued a series of high-profile acquisitions to catapult them into becoming a driving force in internet services and advertising, including their purchase of AOL last summer for $4.4 billion,” notes Verto Analytics CEO Hannu Verkasalo. “Verizon already has some of the underlying assets needed for advertising technologies, and the Yahoo deal would bring additional consumer-facing digital assets, services and apps, portals, and content, which would help Verizon significantly increase its engagement with consumers and simultaneously identify strong channels for connecting AOL’s advertising technologies with its consumers. Combined with Verizon’s sizable existing customer data assets, a Yahoo acquisition could provide a huge opportunity for Verizon to start competing against Google and Facebook – at least in the U.S.”
A quick glance at the top five properties for both Yahoo and Verizon show that a combined Yahoo/Verizon juggernaut would have considerable reach across the media and digital publishing space (a notable absence: Tumblr, once the jewel in Yahoo’s acquisitions crown, doesn’t even make it onto the list – a reflection of Yahoo’s failure to successfully leverage the social network’s user acquisition momentum or sales goals).
“[Yahoo’s] large portfolios of online assets are able to get lots of daily users, and their stickiness index as measured by Verto is 52%, which is better than 41% for Twitter, though behind Facebook’s 75% [stickiness rating].” observes Verkasalo. “However, as for many years, Yahoo’s challenge is not the lack of engagement, it is the lack of traction and growth, and failure to take significant steps ahead as Facebook and Google have been able to do with their well-monetized, increasingly mobile-centric businesses.”
We’ll be keeping our eyes on Yahoo’s slow progress towards finding a buyer. If Verizon ultimately wins this battle, many further questions remain: can the two companies leverage their combined reach into actual user engagement and market traction? And what about the all-important mobile strategy?