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Paywall for HuffPost? Verizon Hunt for Web Revenue Goes Beyond Ads

Verizon Communications Inc.’s VZ 1.43% Oath unit is turning away from the advertising- and data-centric strategy that spurred its creation.

After failing to meet revenue targets by selling digital ads across Yahoo and AOL properties, Oath executives now are focused on selling content subscriptions and giving users ways to make purchases through its sites, according to people familiar with the matter.

The unit is exploring subscriptions to HuffPost news and Yahoo Sports content, among other ideas, some of the people said. Earlier this month, Oath said Yahoo Finance would start such a service in early 2019. Oath’s future ultimately will be determined by Verizon’s new chief executive, Hans Vestberg, a network expert who took over the top job in August.

Oath was formed after Verizon spent about $9 billion to acquire AOL and Yahoo, two struggling web pioneers. It was initially pitched as an advertising rival to technology giants Facebook Inc. and Alphabet Inc.’s GOOGL 1.38% Google. The deals, executives said at the time, allowed Verizon to marry news and media sites like Flickr, Yahoo Mail and TechCrunch with digital advertising technology and the telecom company’s data on wireless subscriber behavior.

Tim Armstrong, the former AOL boss who took the helm at Oath, aimed to bolster page views across Oath’s sites to two billion by 2020 from one billion in 2017. The division, he said, would generate $10 billion in annual revenue by 2020.

But instead of making inroads in digital ads, Oath’s market share has shrunk: The unit is expected to capture just 3.3% of total U.S. digital ad revenue in 2018, down from 4.1% last year, according to eMarketer. In the first nine months of 2018, Oath revenues totaled $5.6 billion, and Verizon executives said in October they expect the unit to fall short of the 2020 goal.

Integrating AOL and Yahoo’s advertising technology platforms took longer than anticipated and still isn’t complete, some of the people familiar with the matter said. Verizon was unwilling to share some data on its wireless subscribers that would have helped create more sophisticated ad targeting, The Wall Street Journal has reported. An attempt to create a mobile video app to woo millennials also floundered.

CONTINUE @ WSJ