Here's a crackpot theory for you: The companies are taking different paths in preparation for an eventual megamerger of the sort that was discussed, and then scrapped, back in 2011.
Now we're deep in speculative terrain, but let's take a few minutes to consider the possibility anyway.
A few years back AOL and Yahoo were the wonder twins of Web 1.0 – both were old-school portals with growing ad-network ambitions, a steady pipeline of marketing tech M&A and a lucrative search business (Yahoo's outsourced to Microsoft, AOL's to Google).
These days they have less in common, despite their common Google DNA in the corner office. Consider:
- AOL has pursued an extremely focused ad-tech strategy. This is where many of its recent acquisitions, product rollouts and partnerships have been focused, including the acquisition of Adap.tv, the launches of AdLearn (DSP) and Marketplace (SSP), involvement in a TV-buying consortium led by IPG Mediabrands and a "programmatic upfront" later this month. It also still has Ad.com and ad server ADTECH.
- Yahoo, by contrast, has bought one marketing technology firm of note in the last year: AdMovate. Its Genome data-driven advertising platform, the fruits of its 2-year-old Interclick acquisition, has rarely been mentioned since Marissa Mayer took the reins a year ago. And Right Media, well…
- On the consumer platforms side, AOL continues to pursue its "barbell" strategy but has moved away from big acquisitions. The company seems disinclined to do deals of the HuffingtonPost/TechCrunch variety.
- By contrast, Yahoo has done at least 17 acquisitions so far this year – including Tumblr, Summly and Rockmelt. Most are consumer brands, tools or apps with strength in mobile and social. Under Mayer, Yahoo's center of gravity has shifted to mobile and usercentric moves.
AOL and Yahoo have discussed a merger before. It was two years ago this week that news outlets reported on Tim Armstrong's overtures to Yahoo's advisors. Carol Bartz had just stepped down after a tenure defined mostly by aggressive cost cutting, and Yahoo's board was casting around for a new strategy. But the talks led nowhere. In May 2012, Armstrong told a cable news show that a merger was "probably not in the cards."
The companies still have much in common, despite their different approaches to product expansion (Yahoo through social and mobile, AOL through video and "pipes").
"They're taking different approaches to diversification," said Jeff Lanctot, the former global chief media officer at Razorfish, who has long familiarity with both companies. "Both approaches are very credible. The strategies, while different on the surface, both are good."
But those commonalities don't necessarily add up to redundancies. Were it to exist today, an "AOL-Yahoo Networks" would likely create the largest desktop Internet audience, led by four flagships: Yahoo, AOL, HuffingtonPost and Tumblr. That publisher network would be a credible competitor to Facebook.
And a combined company would have a full complement of ad-tech tools, including an exchange, video and TV-buying tools and much more. Its multiple ad-network businesses might require some paring down, but not too much.
It's fair to wonder how Ned Brody might factor into this conspiracy theory.
Brody is the former architect of AOL's ad-tech strategy, having spearheaded the launch of its SSP/DSP and overseen those products' integration with its existing ad-network and ad-serving businesses. Earlier this year he was poached by Yahoo as SVP Americas, but he was prevented from officially starting work by a noncompete clause.
That is until this week, when AOL agreed to waive the noncompete as part of a "commercial arrangement" between the companies. Of course, the main reason may have been as simple as AOL wanted to move on rather than become embroiled in a high-profile employee-related lawsuit. But it calls attention to the open lines of communication between AOL and Yahoo.
It probably is silly to suggest Brody's hire is part of any grand plan on the part of either company's board. Having a high-level sales and technology executive with knowledge of both companies working internally to prepare for a merger proposal, now that would be ridiculous. Wouldn't it?
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