My first question upon hearing that Verizon is paying $4.8 billion to buy Yahoo was: Why would Verizon do that?
Yahoo has been a declining brand for some years. In the 90s, it was the search engine and counted millions among those who had an email address with the tech company. It won its battle with AOL and its future was bright.
But Yahoo never evolved after Google entered the market and took over so overwhelmingly that google is now a verb.
A better way to judge Yahoo’s downfall is to remember that Microsoft was willing to pay $45 billion for it just nine years ago. The $4.8 billion Verizon just ponied up is chicken feed in comparison.
The strategic purpose of buying Yahoo
Verizon’s overall strategy is to become a larger technology and media company rather than just a mobile carrier. It wants to count Google, Time Warner and Amazon as its competitors. Its recent purchases of AOL and the Huffington Post prove that. But it has an overall strategy that has yet to come to true fruition.
So why Yahoo? I suppose Verizon wants access to its one billion users. But AOL once boasted of those kinds of numbers. As we learned, those AOL customers were basically empty ones as they sported AOL email addresses they never used. Yahoo did buy Tumblr and brought in Katie Couric to be some sort of news anchor, for what it’s worth.
But it has been a brand without purpose. All that mishmash of what it had didn’t add up to a satisfying whole. It was a collection of disconnected parts.
Part of the reason why I wonder why Verizon would buy Yahoo is that, so far, Verizon’s collection also seems jumbled. What is Verizon going to become?
I suppose we should let this play out and see what Verizon will emerge as. But it worries me when companies grow through acquisition and not organically.
Verizon needs to come up with a brand promise that unites all its offerings. That was the problem Yahoo always had. No one could state what how its users were different than any other kind of user. It had no unifying brand.
If Verizon wants to make some sense of what it will become, then it needs to re-examine its brand. Because, right now, it doesn’t have one that will impact the market the way it should and buying companies like Yahoo don’t fix the problem.