New leader in place as Marissa Mayer resigns and Verizon
completes acquisition
By Lara O'Reilly
AOL chief executive and veteran ad salesman Tim Armstrong is
ready to build a new empire, while Yahoo boss Marissa Mayer is
leaving hers behind.
Verizon Communications announced Tuesday it had completed its
$4.5 billion acquisition of Yahoo's core internet assets.
Ms. Mayer has opted to resign from Yahoo given the changes to
her role following the close of the acquisition, the company
said.
Yahoo will be merged with AOL, which Verizon bought for $4.4
billion in 2015, to create a new online media and advertising
subsidiary called Oath, housing brands such as HuffPost,
TechCrunch, Yahoo Finance, Tumblr and the pair's stack of
advertising technology solutions.
The two companies will benefit from the data Verizon has on its
subscribers, which will improve targeting and measurement for
marketers looking for online advertising alternatives to Google and
Facebook.
Distribution will also be a factor: Soon, some of Oath's content
brands will be automatically available on the "decktop" of Verizon
subscribers' phones through its AppFlash app, for example.
Verizon's go90 mobile video app, will also become more integrated
with Oath's content properties. And entirely new mobile content
brands are set to launch before the end of the year, created by
Oath's internal Factory unit.
Mr. Armstrong, who is now Oath's CEO, said: "The entire company
is centering around brand building for mobile and building our
content brands."
Mr. Armstrong declined to comment on Ms. Mayer's "decision
process" behind her move, beyond referencing that the pair had
planned its organizational structure together as they worked to
integrate one public company inside another.
Ms. Mayer was widely expected to be leaving, despite saying last
year that she planned to stick around. Her name was absent from the
leadership team Mr. Armstrong listed in a memo to staff, which was
reported by Recode in April.
"Given the inherent changes to my role, I'll be leaving the
company," Ms. Mayer said in a note to employees, which she posted
on Tumblr. "Looking back on my time at Yahoo, we have confronted
seemingly insurmountable business challenges, along with many
surprise twists and turns."
Mr. Armstrong confirmed reports that the company plans to lay
off around 15% of staff, or 2,100 of the roughly 14,000 people in
its combined workforce. The job cuts will mainly affect those in
back office functions, where there are duplicate roles and
teams.
Mr. Armstrong now has a job to maintain morale among the
remaining team, but he said his staff are "excited about the
differentiated strategy."
The acquisition was first announced in July last year, but was
hampered after Yahoo then announced two separate hacking attacks
that took place in 2013 and 2014, which led to 1.5 billion user
accounts being compromised. After the disclosure of the data
breaches, Verizon and Yahoo agreed to shave $350 million from the
original offer price. The final price tag was a marked drop for one
of the early web pioneers, which once had a market capitalization
of more than $125 billion during the peak of the dot-com boom.
Mr. Armstrong had previously publicly stated that he wanted Oath
to reach 2 billion consumers, up from around 1 billion currently,
by 2020. He also previously aimed for Oath to boost revenue to more
than $10 billion. Mr. Armstrong has now added a small "caveat" to
that time frame as the deal took longer to close than expected.
Ahead of the acquisition closing, Verizon was predicted to
generate $1.5 billion in net global digital ad revenue in 2017,
according to research firm eMarketer. Yahoo was estimated to
generate $3.2 billion in net digital ad revenue world-wide this
year. Google and Facebook dominate the online ad market, with
eMarketer estimating they will generate $73.8 billion and $36.3
billion in digital ad revenue world-wide this year
respectively.
Oath's brands are best known in the U.S., thanks to Yahoo and
AOL's portal businesses that provided many consumers with their
first access to internet services such as email.
Oath's global growth plan will be centered on a limited number
of key markets to extend its audience outside the U.S., including
western Europe, Japan, Taiwan and Singapore. Mr. Armstrong said he
also wouldn't rule out acquisitions to help Oath achieve its
targets.
Some social-media scorn was poured over Oath's corporate
branding when it unexpectedly leaked through a Business Insider
article in April. Mr. Armstrong quickly responded with a tweet,
confirming the new name. He said that tweet earned Oath "3.5
billion media impressions" globally, which would have cost $100
million in ad placements. The company conducted a study afterward
and found 70% of people were positive about the brand, 15% were
neutral and 15% were negative.
Mr. Armstrong said: "The other positive thing to note on this is
we didn't do this the normal way; we didn't hire consultancies [or
a] branding naming agency; we basically built the entire brand
ourselves internally."
Building media and tech brands is something Mr. Armstrong has
form in. From co-founding a magazine in his early 20s called
"Beginnings in Boston," aimed at young people starting out in their
careers, he moved into sales roles at a variety of early internet
companies in the 1990s. He eventually joined Google, helping grow
key ad products, including AdSense and DoubleClick. Mr. Armstrong
became CEO of AOL in 2009.
Ross Levinsohn, Yahoo's former interim CEO who was in the
running to lead the company permanently but was replaced by Ms.
Mayer in 2012, said Mr. Armstrong is well-positioned to lead
Oath:
"He understands the businesses as well as anyone, is a dynamic
leader and [is] well respected," Mr. Levinsohn said. "He has a
well-heeled parent...if they allow him freedom, flexibility and
provide more capital to acquire other businesses, then his goals
are possible."
Write to Lara O'Reilly at lara.o'reilly@wsj.com
(END) Dow Jones Newswires
June 14, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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