To say Verizon’s efforts to capitalise on the digital advertising revenues have been troubled would be an early contender for understatement of the year.
Following a $4.6 billion write down during the last quarter, Verizon has announced it will be laying off 7% of staff, roughly 800 people, at the media business. In an email seen by CNBC, Verizon Media Group CEO Guru Gowrappan positioned the cuts as part of a broader strategy to turn around the disaster, focusing on three key areas:
- Growing the ‘member-centric ecosystem’
- Increasing usage/spending on its B2B products
- Increasing video supply and distribution
“Last quarter, our leadership team worked to create the strategy that will propel Verizon Media,” Gowrappan said in the email. “We honestly assessed where we are and outlined ambitious but achievable goals that poise us for growth. We shared it broadly with you, and together committed to deliver on our OKRs with meticulous planning, collaboration and rigorous execution.”
In short, the acquisition of Yahoo has been nothing short of a disaster for Verizon. When it was first announced, despite the logical ambition to diversify revenue channels, some were looking at the deal with curiosity. Yahoo certainly had some interesting media properties, the Huffington Post and Tumblr for example, but it didn’t seem like the best way to spend $4.5 billion.
In the months that followed, a monumental data breach emerged, reportedly effecting every single Yahoo account, a decision was made to kill off a very popular news aggregation app, boss Tim Armstrong decided to quit, Verizon had to stomach a $500 million pre-tax charge relating to severance, acquisition and integration costs, and it ditched the Oath branding. All of this was before the December write down of $4.6 billion, and not taking into account the previous acquisition of AOL.
Now in the pursuit of salvaging a gargantuan headache, the team will be trimming 7% of jobs to turn around the business. Verizon might have been searching for alternative revenues and a way to demonstrate to shareholders it can make an impact in blossoming corners of the digital economy, challenging the likes of Google and Facebook for advertising dollars, but this was nothing short of a calamity.
All we now need is a fire, an unplanned pregnancy and Armstrong to appear as the new local pub landlord, and you wouldn’t be able to tell the difference between Verizon’s media business or an episode of East Enders.
You can read the full email below (courtesy of CNBC):
Last quarter, our leadership team worked to create the strategy that will propel Verizon Media. We honestly assessed where we are and outlined ambitious but achievable goals that poise us for growth. We shared it broadly with you, and together committed to deliver on our OKRs with meticulous planning, collaboration and rigorous execution.
As hard as it may have felt at times, we’ve made some great strides to serve our customers globally – from consolidating ad platforms, to expanding the Microsoft partnership, growing live programming and content offerings for our Supers, and prioritizing and launching 8 new or substantially updated products at Build It 2018.
In Q1, we’ll have 3 priority areas: first, grow our member-centric ecosystem with must-have mobile and video products and stem desktop declines; second, increase usage and spends flowing through B2B platforms; third, expand our video supply and overall distribution through partnerships. As we work to deliver on both short-term objectives to stabilize our business, we are also focused on long-term strategies that will accelerate distribution, growth and innovation as part of Verizon.
This week, we will make changes that will impact around 7% of our global workforce across the organization, as well as certain brands and products. These were difficult decisions, and we will ensure that our colleagues are treated with respect and fairness, and given the support they need. Resources and other career support will be provided to help our team members navigate the transition.
In addition, we’ve completed an exhaustive review to prioritize the programs that are currently in our portfolio – consumer products, ad products, platform features, partnerships and data centers.
While every business unit has to manage their P&L, these decisions are being made to streamline resources and invest in opportunities that will help us grow. You all know by now that I deeply believe in an owner mindset and focus as a key ingredient for success – going deep on fewer, key things that will have the greatest impact on our customers and business, and doing them exceptionally well.
I want to be clear that we will continue to scale, launch new products and innovate. We are an important part of Verizon and the $7+ billion in revenue we generate through our member-centric ecosystem puts us among the top tech/media companies in the world. Now is the time to go on the offensive, go deep on our big priorities and do everything we can to advance the business. We will talk more about this and answer questions Friday at Open House.
Our world continues to evolve at a faster pace, and we need to leap ahead of consumer trends. We are reimagining our future, and building new products that will become invaluable to consumers today and in the years to come. That’s the spirit of our company and the spirit we all embody as its Builders.