Verizon Communications Inc. is done with downsizing its Oath business and is looking to grow its online media unit in three verticals: advertising, subscriptions and transactions.
Verizon Media, the unit that controls Oath, laid off about 11,000 employees in 2019. Now it is focused on investing and growing now, Guru Gowrappan, CEO of Verizon Media, said during a fireside chat at CES 2020, the Consumer Technology Association's annual technology and media trade show.
The layoffs included headcount reductions associated with the August 2019 announcement that the company would divest its Tumblr social-blogging site to WordPress parent Automattic Inc. for an undisclosed sum. In an October 2019 quarterly filing, Verizon said 10,400 employees opted into a voluntary separation program, accepting layoffs with severance.
"This is definitely core," Gowrappan said of the remaining Verizon Media business, which saw a 2.0% decrease in revenue to $1.8 billion for the quarter ended Sept. 30, 2019. Verizon Media will not be divesting more and will consider strategic acquisitions in the future, he said.
Verizon Media will now focus on three primary lines of business. It already gains most of its revenue from advertising across its Yahoo, AOL and other sites. Secondly, it will grow its subscription business, which already generates some revenue on platforms, such as Yahoo Finance Premium and TechCrunch's paid offering Extra Crunch. Third, it will monetize more transactions across its platforms.
The unit would like to gain a third of its revenue from each line of business, bringing subscription and transactions up to the level of advertising. Aiding that goal, Verizon Media will move more aggressively into sports betting, the executive said. To that end, MGM Resorts International COO Bill Hornbuckle joined Gowrappan on stage to discuss a sports betting partnership between the two companies.
MGM will gain exposure to Yahoo! Sports' user base of 60 million and integration with Yahoo's fantasy sports leagues, while Verizon Media will gain scale across MGM's gaming resort properties, the executives said.
On advertising, Verizon Media has begun taking share from the largest online advertisers in the U.S., Facebook Inc. and Alphabet Inc., Gowrappan said, as recent concerns over security, privacy and regulation have driven marketers to other advertising outfits like Oath. Besides attempting to take share from those two large-scale competitors, Oath is targeting a leadership position in the remaining online advertising market, which is about $80 billion in scale, he said.
He also said the upcoming 5G mobile broadband standard, which is set to offer download speeds many times faster than the current 4G LTE wireless networks, will create new opportunities for digital advertising and advertising interactivity both on the internet and on connected TVs. It will also create advertising opportunities in new technologies, such as augmented reality. Verizon Media is investing in these kinds of 5G advertising options at a time when its parent telecom company is investing heavily in building out a 5G network.
The company will also look to increase its transactions volume through advertisers and sellers across its platforms, exposing a user base of about 900 million to e-commerce opportunities.