Google and Facebook should watch their backs. In the aggressively growing digital-ads space, US telecoms colossus Verizon has pledged to upset their dominance with a new division called Oath.
Created to oversee the imminent merger of the Verizon-owned AOL Inc., the tech media conglomerate, and its rival Yahoo Inc. (as predicted by TechMutiny in Issue No.12), Oath aims to be one of the world’s biggest operators in online and mobile advertising.
And, in a sort of reverse takeover, AOL CEO Tim Armstrong (pictured) will be the boss of this new multi-billion-dollar ad-tech entity.
Digital ads generated US$181bn in 2016 and are forecast to overtake TV advertising for the first time by this year’s end.
According to international media agency Zenith, search engine behemoth Google nabbed US$79.4bn from digital ad sales last year, while its hottest competitor Facebook brought in US$26.9bn. This gave the two media giants 20% of the global ad spend in 2016, up from 11% in 2012.
The next Internet company in Zenith’s ranking is China’s Baidu with US$10.4bn, followed by Microsoft (US$6.1bn) and then Yahoo (US$4.7bn).
Verizon’s new media horizon
Verizon, which reported US$3.2bn in ad revenues the same year, is under pressure to boost its performance after agreeing to buy the constantly embattled Yahoo’s core Internet assets for US$4.48bn.
With US telecoms competitor AT&T now owning Time Warner, one of the world’s leading media and entertainment conglomerates, Verizon is forced to embark on a similar consolidation strategy.
Armstrong has told the media Oath will eventually be working with more than 10 million content and brand creators, reaching 2 billion consumers (compared to 1.3 billion today) and generating revenues of up to US$20bn.
This is a tall order by any standards. But digital ads, which could soon be generated via Virtual Reality (VR), Augmented Reality (AR), Artificial Intelligence (AI) and Internet of Things as well, are still going through the Wild-West phase and you never know where the next global market leaders will come from.
After decades of distributing only voice, data and third parties’ content, the world’s telecoms operators want to hike their valuation and revenues by also owning content intellectual property (IP). Selling digital advertising around that content is key to fulfilling their ambitions.
In Verizon’s case, Oath is the answer.
To find out more about Oath and how the Yahoo/AOL merger could overhaul the ad-tech sector, download TechMutiny Issue No.15