AT&T has jumped quickly into the ad tech space by acquiring digital advertising technology company AppNexus. It was an obvious move by the telecommunications giant, especially so quickly after its merger with entertainment giant Time Warner was approved by U.S. regulators. Now, AT&T has most of what it needs (distribution, content and access to digital advertising) to become an important player in the marketplace and compete to take digital ad dollars from Google and Facebook.
How much did it take for AT&T to make this leap? A cool $1.6 billion, according to a report in The Wall Street Journal. The deal will drop AppNexus’s digital advertising capabilities under the ever expanding communications tent that is AT&T. AT&T now has the capability to use AppNexus’ technology to better leverage its existing customer data and its vast portfolio of television content it just acquired in that landmark merger with Time Warner.
To its credit, AT&T went hunting for grizzly with this purchase. AppNexus is one of the largest ad exchange companies in the world and, in a news release, AT&T has indicated the acquisition will help bring about a big push by the company into advanced television advertising. AT&T will take advantage of AppNexus’ experienced management team and 400 strong software engineers and product managers. AppNexus is well known for its leadership and vertical expertise in machine learning and predictive analytics, advertising technology and video.
The deal also allows AT&T to streamline its advertising process which gives it a better shot at competing with the big platforms. It’s well known that Facebook and Google control a major portion of the process of selling and buying ads from end to end, which gives them control of all of the data that comes along with it. So it stands to reason, other companies that use exchanges, demand-side platforms and other tools to analyze their ad buys will lose some information and revenue, if AT&T can successfully pull off the integration of AppNexus.
The man being put in charge of this acquisition and the melding of the two companies certainly has the background and experience to make it work. AT&T Advertising and Analytics CEO Brian Lesser has worked in both ad tech and advertising. He will have a strong point of view on the advertising ecosystem and his experience will allow him to understand and optimize the mechanics and intricacies of ad tech. And, for good measure, he spent some time on the Board of Directors for AppNexus.
Finally, buying AppNexus is another shot across the bow by AT&T to its biggest corporate rival. AT&T now has what it needs to go head-to-head with Verizon. Verizon acquired AOL and Yahoo (now known as Oath) in 2017, giving Verizon access to advertising technology as well as digital content operations. So this is a huge trend now. You can see why other telecom companies may be pursuing similar strategies to compete in the digital ad space.