Market Insight

AT&T, DISH Network, and WPP acquire INVIDI to boost addressable TV offer

November 28, 2016  | Subscribers Only

Kia Ling Teoh Kia Ling Teoh Senior Research Analyst – Advertising & Television Media, IHS Markit
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AT&T, Dish Network and WPP have jointly acquired addressable advertising platform INVIDI for an undisclosed amount. Under the collective ownership of the three companies, INVIDI will continue to operate independently with representatives to the board of directors from each owner.

INVIDI works with advertisers to run hyper-targeted campaigns on TV and across multiple distribution platforms based on various attributions. It operates in the US, Europe, South America and Asia.

AT&T is a telecommunication service provider headquartered in the US; DISH Network is a US satellite television service provider, with 13.6 million pay TV subscribers as of Q3 2016; and WPP is the largest global advertising agency by revenue, headquartered in London.

The acquisition underlined the ongoing efforts of the three owners to scale up the deployment of addressable TV. 

 

Our Analysis

AT&T: A better way to monetise its content and ad business

The deal helps AT&T to continue building their addressable capability, which will improve the monetisation of their audiences via advertising, amidst the stagnation and decline of their other core businesses.

In 2015, AT&T’s wireless, legacy and voice services contributed to 68% of the company’s operating revenues in 2015; however, the two segments showed minimal (and negative) growth in 2014 and 2015. Conversely, AT&T claimed that its annual advertising revenue reached $1.5bn in 2015 and that it grew at a double-digit rate in Q3 2016. 

 

The INVIDI acquisition follows two large acquisitions made by AT&T. The legacy telco pushed into media with acquisition of satellite television service provider DirecTV in 2015, in view of the slowing down of its other businesses. In Q3 2016, AT&T’s internet and TV service U-verse lost 326,000 subscribers compared to Q3 2015, while their new asset DirecTV added 323,000 subscribers in Q3 2016 in the US, compared to Q3 2015. The $48.5 million DirecTV deal brought in an extra 38 million pay TV subscribers, growing AT&T’s addressable audience. The telco continued to bank on DirecTV by launching DirecTV Now in November 2016, in tandem with the acquisition of this INVIDI.

In October 2016, AT&T also agreed to buy the Hollywood blockbuster creator Time Warner (which owns HBO, TNT, TBS, CNN, Warner Bros, and Cartoon Network) for $85.4billion, turning the giant telecom into an entertainment company. The deal brings some of the most popular shows and movies to AT&T (such as ‘Games of Thrones’, ‘The Big Bang Theory’, and top listed box office movies from Warner Bros).

AT&T hopes to leverage the popular content from Time Warner and the addressable platform, enhanced by INVIDI to further expand into the advertising market.

DISH Network: a plan to expand its digital advertiser base with ad tech innovations

Dish Network, a competitor of AT&T, began offering addressable TV in 2012 via its ad sales division DISH Media Sales. It launched addressable advertising specific to Spanish-language networks to address the growing Hispanic consumer group and claimed addressable advertising reached 57% of homes nationwide. Data is a key element to addressable advertising and Dish Network’s focus is to continuously improve the audience segmentation used in its addressable and recently launched programmatic offering. In July 2016, the company partnered with real-time information services provider, Neustar to enhance consumer data granularity on its own platform.

In an effort to lure digital advertisers, DISH Network has aggressively expanded its ad tech capabilities since 2015. In October 2015, it launched a programmatic strategy in partnership with ad tech provider Iponweb, to build a Dish-owned programmatic platform launched at the end of 2015. The integration introduced Dish advertising inventory to more than 150 demand partners, many of which were new customers for the company. Dish Network hopes that the acquisition of INVIDI will further increase Dish’s access to digital ad dollars, which are currently going to the large search and social players.

WPP: marrying data with the demand for addressable

Based on IHS Markit analysis of the advertising M&A trends, the INVIDI deal is perfectly in line with the advertising giant WPP’s long-term strategy. The ad agency, which scaled down its buying spree in 2016, has focused its acquisitions on the ad tech and data space. In the last 5 years, WPP’s ad tech acquisition consisted of two companies: Bannerconnect in 2014 and Exchange Lab in 2015. The INVIDI acquisition comes in response to the rising demand for addressable video from WPP’s clients. WPP hopes this will increase advertiser trust in WPP’s ability to leverage its strong position in data and analytics, which has so far not been actionable. Complemented with the first party data from AT&T and Dish, this could provide a very compelling addressable product for WPP clients. WPP’s investment in INVIDI means that the deal will also bring WPP’s customers to AT&T and Dish and provide a demand-side perspective when evolving the INVIDI product.  

 

Deepening data collaboration and opportunity for innovation for INVIDI

To the venture-capital backed, (including Comcast and Google) INVIDI, the acquisition means substantial financial backing and industry knowledge for more innovation. Prior to this acquisition, Dish Network and AT&T’s DirecTV already had distribution agreements with INVIDI, and WPP was one of INVIDI’s pioneer investors.

The acquisition will strengthen collaboration between the three companies, particularly when comes to data sharing, an important step as first-party data is often hard to access.

The combined capabilities and user base of the three companies will allow INVIDI to more effectively serve ads to its advertisers, by delivering larger audiences.

Setting best practices for the addressable TV market

By institutionalizing the collaboration of the two largest addressable advertising players, the industry can expect to see some INVIDI-branded standards for this type of advertising, something which has very much been lacking in any technology-driven ad solution.

Media companies along the advertising ecosystem have been doing targeted advertising, but mostly in the online space. This is the first time that an advertising agency, a cable TV provider, and a telecom join hands to do addressable together, even as competitors. This demonstrates that the TV ad industry can offer strong technology rivalling that of Google and Facebook in the online advertising industry and hopes to attract some of the mid and bottom-funnel dollars reserved for social and search.

Furthermore, the INVIDI deal may consolidate the addressable market, leads to better processes and better practices. Right now addressable TV ad market is still developing with different definitions, and there are still a huge resistance (e.g. a traditional TV mind-set or lack of understanding) from broadcasters to do addressable TV. Standardisation across companies will generate consistency and instil trust in addressable.

Lastly, the acquisition offers an example how data owners (broadcasters) and content owners can pool resources together, without giving up their ‘gold-dust’ audience data. Other broadcasters and content owners or other media companies with an interest in doing addressable might not necessarily form/create a joint company, but this will be conducive to the ‘habit’ (practice) of data sharing and a more collaborative environment.   

 

 

 

 

 

Geography
Europe UK USA
Organization
AT&T DISH Network WPP
Research by Market
Media & Advertising
Category
Advertising
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