AOL CEO Armstrong told CNBC that combining the power of Yahoo and AOL could give Verizon Communications the necessary tools and reach to become a major powerhouse in digital advertising.
"Google and Facebook are doing such a good job executing," said Armstrong, who helped lead Verizon's successful bid for Yahoo. "Trying to do what Google and Facebook do is not a good strategy ... We're the up-and-comer. We're going to compete for the gold medal in the future. We have to have a differentiated performance."
Verizon announced on Monday that it would be acquiring Yahoo's operating business for $4.83 billion in cash. The company said in a statement that Yahoo would be integrated with AOL under the leadership of Marni Walden, executive vice president and president of product innovation and new businesses at Verizon.
Armstrong explained that Google's power was based on its search capabilities and Facebook was the leader in social media. He said he believed Verizon's strength was in building a "house of brands," explaining that the acquisition would help strengthen Verizon in three key ways.
Yahoo currently has more than one billion active monthly users, including 600 million monthly active mobile users. When it gets folded into Verizon's portfolio, the telecommunications company will have access to online behavioral data on those consumers.
It will also have the ability to place advertising on some of the most trafficked destinations online, including Yahoo News and Yahoo Sports.
In addition, Yahoo user data could be combined with insights from Verizon's mobile, internet and cable customers. The information will help power Verizon's programmatic ad technology platforms, which utilize consumer behavior to determine which digital ads to display.
AOL's programmatic ad platform, One by AOL, was one of the main drivers behind Verizon's purchase of the company in May 2015. Verizon will further bolster its position with Yahoo's programmatic video platform, BrightRoll, and mobile analytics firm, Flurry.
"Ad tech plus really strong content investments creates a very differentiated approach that consumers are willing to adopt and brands are willing to pay for," Armstrong said.