Will Verizon’s Subscriber Data Give It An Edge In The Digital Ad Market?

A few months ago, Verizon (NYSE:VZ) closed its acquisition of Yahoo’s Internet assets, combining it with AOL to form a new subsidiary called Oath. Verizon is banking on Oath to double down on the digital advertising business at a time when its bread-and-butter wireless operations have seen a bit of a slowdown. While the digital ad market is growing fast, Verizon still remains a relatively small player. Research firm eMarketer estimates that the company will hold just about 4% of the U.S. digital ad market this year, compared to 41% for Google and 20% for Facebook. That said, Verizon still has ambitious plans for Oath, intending to grow its top line from $7 billion a year to around $20 billion by 2020. The company has a relatively wide spectrum of ad technology assets, including programmatic, video search engine and native advertising. Verizon has also been focusing on improving the efficacy of its digital advertising by improving its consumer data sets.

We have a price estimate of $52 for Verizon’s stock, which is slightly ahead of the current market price.

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Verizon Is Banking On Subscriber Data Sets To Gain An Edge

Verizon could be in a unique position when it comes to ad targeting, as it could combine the data sets from its ~1.3 billion users on various Oath properties (such as AOL, Yahoo Mail and Yahoo Finance) with data from its 110 million+ wireless subscribers and its tens of millions of wireline customers. Mobile consumer data is typically the most difficult data to collect, as traditional browser cookies that advertisers use to target customers on desktops don’t universally work on mobile phones. Verizon is looking to partly circumvent this with data from its wireless customers. The carrier recently launched its Up rewards program for wireless customers, allowing them to earn credits by spending towards Verizon products and services. In order to be eligible for these rewards, customers have to sign up for the Verizon Selects marketing program, which gathers personal information from customers including their demographic data, interests, location as well as their web-browsing and app usage history. With these details, Verizon could form a fairly accurate profile of its users, allowing it to command premium ad rates from advertisers, as it may be able to better personalize ads. That said, Verizon will have to walk a fine line in marrying its various data sets, as this could raise a lot of privacy concerns. Moreover, being a telecom operator, Verizon needs to take more precautions under federal law when it comes to customer data.

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