AT&T’s Interest in Ad Tech Gets Thumbs Up on Madison Avenue - Competing with Google and Facebook
AT&T’s Interest in Ad Tech Gets Thumbs Up on Madison
Avenue
Telecom giant is in talks to acquire AppNexus, which
would make it a bigger player in field dominated by Google and Facebook
By Lara O’Reilly and Alexandra Bruell June 22, 2018 2:36
p.m. ET
CANNES, France—News of AT&T Inc.’s talks to acquire
advertising technology firm AppNexus was welcomed by marketers, who are eager
to have more options in the online ad sector beyond Google Inc. and Facebook
Inc. the dominant players.
AT&T, which is fresh off its acquisition of Time
Warner Inc., has a treasure trove of TV and digital content from brands such as
CNN and TNT. Now the telecom giant is in talks to buy AppNexus for $1.6
billion, a deal that would help it monetize that content better, using data
from wireless customers to serve highly targeted ads.
“It’s a lightning bolt across the industry,” said Bob
Rupczynski, McDonald’s global vice president of media and customer relationship
management, on the sidelines of the ad industry’s annual Cannes Lions festival
on the French Riviera. Mr. Rupczynski said the deal would give AT&T
immediate infrastructure and more data and could give marketers “more leverage”
in dealing with Google and Facebook.
“The more options we have available, the better it’s
going to be for the market,” said Antonio Lucio, chief marketing officer at
Hewlett-Packard Co.
Some industry executives speculated that AT&T could
also look for further advertising technology acquisitions in the coming months
to strengthen its offering to marketers.
AppNexus’s technology helps advertisers buy ads using
automated systems, across swaths of websites and apps. The firm also supplies
technology to publishers so they can manage and sell the advertising space on
their websites. Its marketplace, which connects the buyers and sellers of ads,
also extends into video and the web-connected TV space.
AppNexus’s capabilities could be useful as AT&T
launches new streaming services of its own that aim to generate some revenue
from ads. On Thursday, the company unveiled a $15-a-month video service
offering a “skinny bundle” of TV channels. Unlimited data plan subscribers will
get free access to the service, which is called WatchTV.
The AppNexus deal “would be a key step towards helping
AT&T build out a much more significant digital advertising business than it
currently has,” said Brian Wieser, a senior analyst at Pivotal Research, in a
note.
Marketers are all “very keen for diversification,” said
Quentin George, founder of the ad-tech consultancy Unbound. “They’re concerned
about their reliance on Facebook and Google.”
Google took a 31.7% share of the $232.27 billion spent
globally on digital advertising last year, according to eMarketer, while
Facebook took a 17.9% share. Their market share in the U.S. is even higher.
AppNexus should help AT&T develop a more advanced
business in targeted TV ads, said industry executives.
“It would provide some of the capabilities the company
would expect it needs in order to apply data and automation to traditional TV
advertising,” said Mr. Wieser in his note. However, he added, “we think this
latter opportunity is relatively limited in the near-term.”
On closing the Time Warner deal, AT&T restructured
the combined company into four units, including an advertising and analytics
business. Brian Lesser, who was on the board of AppNexus, joined last October
from WPP’s GroupM media-buying division to oversee those operations.
If AT&T does acquire AppNexus, it is unclear whether
it would continue the ad tech firm’s offering for third-party publisher
websites or focus on monetizing its own content with ads.
“One has to ask how other media companies feel about
working with a very large competitor now that AT&T is a media company via
their Time Warner acquisition,” said Anthony Katsur, senior vice president of
digital strategy at Nexstar Media Group. “That could create a natural tension.”
AT&T declined to comment.
Around one-third of AppNexus’s business is in Europe,
according to people familiar with the matter. That means AT&T will also
need to be mindful of compliance with the region’s sweeping new General Data
Protection Regulation, also known as GDPR.
One of AT&T’s strongest assets is its customer data,
said Michael Nevins, chief marketing officer at Paris-based ad-tech company
Smart. “GDPR would certainly be one of the filters they would have to be
thinking through when they think about how they activate that data [in
Europe],” Mr. Nevins said.
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