Yahoo recently set April 11 as the date to submit preliminary bids for its core search and display advertising business, setting off speculation again about whether Verizon (NYSE: VZ) will acquire the embattled Web property. But while gaining Yahoo's ad business wouldn't "catapult Verizon to the top" of the advertiser heap, a new Wall Street Journal article says, the purchase would give Verizon and AOL a stronger competitive edge.
That's because although Yahoo has only about 2.4 percent of the mobile advertising market, the company's established user base -- over 1 billion total monthly users and 600 million mobile users -- would give Verizon "tremendous scale" to work with in the market segment, according to the article.
About 40 firms have signed nondisclosure agreements with Yahoo in the past several weeks, but the bidding process will likely reduce that amount and give a clear signal as to which companies are serious about buying the company. Microsoft (NASDAQ: MSFT), IAC/Interactive Corp, Time Inc., and several other companies reportedly have been contacted by Yahoo, and Microsoft is rumored to be in discussions with private-equity firms to finance a buyout, another WSJ article says.
However, Verizon is still held to be the most interested potential buyer. Yahoo's scale could help the service provider, particularly its AOL unit, which is managing ad efforts for the company's go90 mobile-first streaming service, contend with advertising giants Google and Facebook.
Google (NASDAQ: GOOG) and Facebook (NASDAQ: FB) together hold about 50 percent of the mobile advertising market, one worth $43.6 billion based on an eMarketer estimate.
But as the margins for wireless services thin out, Verizon appears to be looking for additional ways to bring in revenue -- and taking on Web advertising giants may be easier with both Yahoo and AOL in its pocket.
"Management believes that communication services as a percentage of total consumer consumption has remained fairly flat at approximately 6%," a February research note from Barclays pointed out. "Coupled with the situation in which over time it will be increasingly difficult to capture increased dollars for increased access usage has led Verizon to pursue new revenue opportunities that 1) do not necessarily incrementally tap subscriber wallets (think advertising) and 2) can be scaled independently of a network."
For more:
- see this WSJ article (sub. req.)
- and this article
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