![]() Earlier this year, AT&T CEO Randall Stephenson said the combined AT&T-Time Warner would become "an alternative to the current digital ad duopoly," referring to the clout of Google and Facebook.ĪT&T, though, is more focused on premium video and TV advertising, which Shafer noted is quite different from Oath. AT&T Inc., for instance, has repeatedly stressed the importance of becoming a stronger competitor in the digital advertising market as part of its recently completed purchase of Time Warner Inc. Looking forward, Shafer said it is hard to say what Oath's write-down indicates for other new players trying to compete in the digital advertising space. "The internet's about unfettered communication, and then you advertise to that flow," Rothman said. Israeli Rothman, an internet advertising consultant, said that both AOL and Yahoo had focused too much on content creation with brands such as HuffPost and TechCrunch, whereas Google and Facebook, the leading online ad giants in the U.S., had found ways to monetize user-generated traffic. "is tough for firms like Oath that lack the same scale, user engagement and user data that can be used by advertisers to target ads in a variety of ways." Shafer noted that competing against Google, Facebook and even Inc. "We are seeing revenue pressure from search and desktop usage, which is more than offsetting positive growth in mobile usage and video products," Verizon CFO Matt Ellis said during an October earnings conference call. In October of this year, however, the company said it would not meet its $10 billion target. Upon forming, Oath set a goal of getting to $10 billion in annual revenue by 2020. "But without that cooperation, it's hard." "The whole concept here is that you have all these insights into customers' usage behaviors and consumption and, if you can make that available through the content platform, you can do something special from an advertising standpoint," Feldman said. Goldman Sachs analyst Brett Feldman echoed those sentiments at an investor conference in September, citing reports that the collaboration between Oath and Verizon Wireless had been minimal. "But the company never fully followed through on that plan due to user privacy concerns," he said. Verizon hoped to turn these numbers around, he said, by marrying its digital ad inventory with its wireless subscriber data in order to offer more targeted and higher-priced advertising opportunities. "AOL had stabilized its digital ad revenues prior to being purchased by Verizon, but Yahoo's ad business had been flat or declining each quarter on an annual basis since mid-2014," Shafer said. Verizon combined the acquired Yahoo assets with its AOL business to create the Oath subsidiary, with a portfolio of 50 media and technology brands. Verizon first formed Oath in 2017 after closing its acquisition of Yahoo's operating business for about $4.48 billion. Seth Shafer, an analyst with Kagan, a research group within S&P Global Market Intelligence, said "news of the write-down wasn't surprising," as Verizon has faced "an uphill struggle in growing revenues and market share for Oath." 11 SEC filing, Verizon said Oath has encountered "increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings." The company expects these pressures to continue, resulting in a loss of market positioning within the digital advertising business. and Alphabet Inc.'s Google LLC in the online advertising space.Įxplaining the write-down in a Dec. Analysts said the write-down was not necessarily surprising given the difficulties Oath has faced since inception, noting the move exemplifies how difficult it is to compete against Facebook Inc. The charge is almost equal to the full goodwill balance of the business, which previously stood at $4.8 billion. media business, Verizon recently said it expects to record a noncash goodwill impairment charge of about $4.6 billion, or $4.5 billion after taxes, in the fourth quarter. Verizon Communications Inc.'s efforts to break into the online advertising market were always a long shot, and now the company is widely seen to have acknowledged defeat.įollowing a comprehensive five-year strategic planning review of its Oath Inc.
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