Market Insight

AT&T announces Xandr

October 18, 2018

Ryan Doherty Ryan Doherty Research Analyst, Advertising, IHS Markit

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AT&T has unveiled its advertising and analytics business Xandr. Named after AT&T founder Alexander Graham Bell, Xandr will house all of the telco giant’s data-led offerings, including addressable advertising service AT&T AdWorks, analytics business ATT.net and ad-tech unit AppNexus. Xandr is rebrand of AT&T’s AdCo unit, which was a temporary business until AT&T’s advertising plan had solidified. Revenue for the advertising business (AdCo) grew 16% year-on-year to $1.8 billion in Q2 2018. The announcement follows in the aftermath of its approved Warner Media acquisition.

Our analysis

AT&T is settling into a strong position in the ad market as it seeks to challenge the Google-Facebook duopoly for market share. In the aftermath of its landmark acquisition of Warner Media, the group now has three key components in place; access and distribution through AT&T, premium content through Warner Media created by the likes of HBO and CNN and ad monetization through AppNexus.

On the back of AppNexus acquisition, AT&T has now decided it is an appropriate time to rebrand its AdCo advertising company, and build its brand in the ad ecosystem. The business aims to provide targeted advertisements across multiple platforms and bolster average ad prices by leveraging the enlarged group’s enhanced customer data.

Where Xandr differs is in its apparent rejection of the walled garden mentality common amongst its new rivals. It intends to launch a marketplace for other media owners, using data driven ad technology to revolutionize the advertising sector by bringing the power of digital buying and selling, and analysis, to the entirety of the TV and Video sector. Partners can run their own data analytics on the AT&T platform, enriched by AT&T subscriber data.

It already entered into agreements with Altice USA and Frontier Communications to aggregate and sell their national addressable TV advertising inventory, further improving its monetization opportunities via advertising. Xandr will also collaborate with a4, Altice USA’s advanced advertising business, to help expand a4’s nationwide addressable digital advertising capabilities. These partnerships demonstrate its commitment, at least in the US, to an open and nationwide infrastructure by bringing other companies in and aiming for sector-wide improvements. This is a key differentiator to Facebook and Google.

By owning the distribution means, the content and the advertising technology, the group has set itself in good stead to become a major player in the global TV and video advertising market. The group has also promised greater transparency by addressing ad fraud, supporting brand safety and accountability for advertisers. Combining this with its enhanced inventory should enable revenues from advertising to accelerate beyond the 7.3% growth experienced in 2017. However, while conceptually appealing, success will depend on the willingness of other media owners to partner with AT&T, advertisers’ willingness to reallocate spend at scale, and the actual execution of the data analytics promise.

Geography
North America USA
Research by Market
Media & Advertising
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