‘The vision is far ahead of practicality and reality:’ AT&T’s plan to reinvent TV advertising is massively ambitious — and still very much unproven

Press   |   Business Insider

By: Abby Jackson//Sept. 28th, 2018

Article originally published on Business Insider: https://www.businessinsider.com/att-xandr-advertising-2018-9

  • AT&T unveiled newly-named Xandr, its advertising and analytics division, at the AT&T Relevance conference this past week.
  • At the show the telecom giant announced partnerships with Altice and Frontier for addressable advertising.
  • The conference showcased a bold vision from Xandr CEO Brian Lesser, but offered few specifics about how it would operationally work, according to ad industry experts.

AT&T has finally christened the advertising group that was two years, an antitrust lawsuit and pending appeal, and an ad-tech acquisition in the making.

At AT&T Relevance, a three-day conference of about 250 media and advertising professionals, AT&T laid out the vision that spurred its nearly $90 billion M&A transactions.

“This was their coming out party and it’s pretty important,” Dave Morgan, CEO and founder of Simulmedia, told Business Insider. “Ever since they first announced the merger agreement two years ago, a central justification for the merger was the capacity to leverage distribution and data from AT&T with content and inventory from Time Warner.”

Xandr— so named for AT&T’s founder Alexander Graham Bell — includes the advertising and analytics businesses and ad-tech company AppNexus that was purchased in June.

And now, according to AT&T, the real work begins.

“There’s a hell of a lot pressure on Brian Lesser,” Morgan recounted AT&T CEO Randall Stephenson telling the audience at the event.

With addressable, ‘the vision is far ahead of practicality and reality’

One theme at Relevance was AT&T’s desire to push ahead on the addressable front. Addressable advertising — a sophisticated form of TV advertising that allows marketers to target audiences based on certain traits like household income level — already exists at AT&T though its AdWorks division.

To advance this work, Xandr forged agreements with Altice USA and Frontier Communications to sell national addressable TV advertising inventory.

“AT&T is trying to be the chief innovator,” Brian Gleason, CEO Performance Media Group, GroupM, told Business Insider. “They shared the macro picture of Xandr and what are their core principals.”

But aside from providing a bold plan around addressable TV, the discussions lacked specifics on how AT&T planned to bring the targeting capability to the whole country, not just DirecTV and a handful of other cable companies, according to Gleason.

“It wasn’t an opportunity to go deep on addressable,” he said. “They haven’t quite developed that product to where they are going to launch it yet. It lacked the ‘how’.”

The addressable discussions, while ambitious, weren’t realistic, according to Tim Hanlon, founder and CEO of The Vertere Group.

“I would say that right now, the vision is far ahead of practicality and reality,” Hanlon told Business Insider. “Others with more tech and more of a head start — e.g. Comcast NBCU — still aren’t fully there yet.”

Still, Hanlon, who did not attend the event in person, said he has “cautious optimism” for what AT&T will be able to build, as the company has all the right components to build out the first true national addressable business.

“Premium content plus data informed pipes equals ad nirvana,” he said.

AT&T will provide customer data for Xandr

The ability to leverage AT&T’s customer data to bolster advertising analytics was another important theme at Relevance.

“Randall [Stephenson] was very explicit that he expected AT&T Comms to be providing data for Xandr,” Morgan said. “That’s quite a different story from Verizon, where one of challenges was that they never had Verizon Communications customer data, and also Comcast, where there’s a big wall between customer data and the ad businesses.”

AT&T Communications is the traditional telecom business within the company which manages the phone businesses and DirecTV.

Verizon reportedly was conservative with its customer data following its construction of digital media business Oath. It didn’t share information on apps and web-browsing activity unless customers opted in, The Wall Street Journal reported in September.

Of course, AT&T must adhere to its own policies prohibiting it form sharing raw personal data with advertisers.

But where it is possible within the law and AT&T policy, Stephenson made it clear that the company will bring ensure data will be made available, Morgan said.

People are secretly applauding Xandr’s efforts, even if they don’t like it

Xandr’s ambitious plan for its platform is what the industry desperately needs, Lorne Brown, CEO of Operative told Business Insider

“The whole TV industry needs to operate more like a single platform,” Brown said. “Buyers don’t buy CNN or ESPN or CBS…they buy TV the platform. And if this platform turns into separate mini walled gardens with different tech stacks … [the industry will] shrink.”

At Relevance, Xandr provided the image that it will be a unifying platform the entire industry can use.

“There was a desire to send the message that we are trying to create a hub that others can use, and we are serious about it,” according to Morgan.

And the mix of attendees was one indication that AT&T hopes to have diverse buy in from the the media, tech, and advertising industries. The attendees came from agencies, tech companies, measurement companies, and even other sellers like Fox.

“No one wants to rely on another company, and in some cases a competitor, to monetize their inventory, but the facts are, TV companies would rather work existing partners, like Comcast or AT&T vs. the duopoly,” according to Brown.

“Unification and collaboration is needed now more than ever, so I think people secretly or publicly are applauding Xandr’s efforts, even if they don’t like it,” he said.


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