By Amaresh Godbole The news of Verizon ’s buyout of Yahoo has taken the business and digital world by storm, with a lot of speculation about the thinking, valuation, implications and so on. The strategic play is quite simple to understand really. We live in a world where Google is happy to foray into cars and set up balloons to deliver data and Amazon is the largest cloud service. An infrastructure player like Verizon is a just a pipe and a commodity from an end consumer’s standpoint. The acquisition of AOL and now Yahoo is clearly about having a true B2C presence and opening up ad revenues as a new income source. It’s also a way to safeguard the future by evolving into an ecosystem rather than just an infrastructure player. Closer home, new age players such as Reliance Jio are launching with exactly that vision in mind. The belief at Verizon seems to be that by combining the power of AOL and Yahoo and leveraging their mobile network to drive subscribers, they can hope to compete with the Google’s of the world. The challenge they will have to overcome is that AOL and Yahoo, while great legacy names are seen as just that – strugglers in the new age of content, social, mobility and cloud. This perception will need to change if they are to attract serious advertising money. And perception usually lags actual change, so it will be an uphill battle. First of all they will need to restructure the companies, find a way for rapid cultural integration so they play as one team and deliver one proposition, well suited to the new age world of content consumption. Beyond that, they’ll have to demonstrate the sustainability of their content ecosystem before serious advertising budgets are diverted. If they do manage that, then we may be in for some exciting times. Perhaps we’ll see more competition which could accelerate innovation and drive down rates in the medium term. Being a wireless provider will give Verizon access to invaluable consumer behaviour data, which if smartly mined and deployed could be a competitive advantage in the content game. I think we’re likely to see the battle played out in the U.S. market first, it will be a while before we experience any dramatic shifts in India. But this is definitely a journey everyone in the marketing sphere should track keenly. I know I will. The author is Managing Director, India at DigitasLBi
The Verizon acquisitions of AOL and now Yahoo is clearly about having a true B2C presence and opening up ad revenues as a new income source.
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