Giving credence to reports last week, AT&T on Monday confirmed plans to acquire AppNexus as part of the telecom giant’s push to build its advertising business and improve the value of its recently acquired Turner inventory.
Privately-held AppNexus is an ad-tech firm that operates one of the largest independent ad exchanges, providing publishers, agencies and marketers with enterprise products for digital advertising.
The acquisition is an investment in AT&T’s plan to grow its advertising platform, with a focus on advanced TV advertising. It also enables the company to extend its advertising and analytics footprint worldwide, expanding into Asia-Pacific, Europe, Australia and Latin America. Following its recent acquisition of Time Warner, AT&T announced advertising and analytics would be one of its four major business segments, with Brain Lesser leading the unit.
“Ad tech unites real-time analytics and technology with our premium TV and video content,” Lesser said in a statement. “So, we went out and found the strongest player in the space. AppNexus has scale of infrastructure, advanced technology and diverse talent. The combination of AT&T advertising & analytics and AppNexus will help deliver a world-class advertising platform that provides brands and publishers a new and innovative way to reach consumers in the marketplace today.”
AT&T said it will leverage its distribution mediums with more than 170 million direct-to-consumer relationships to improve the value of its ad-supported premium video content portfolio, which includes Turner Networks, Audience Network and Otter Media.
The company will also invest and build upon AppNexus’ technology, integrating it with AT&T’s first-party data, video content and distribution.
“Innovation is core to the heritage of both AT&T and AppNexus, and we have an exciting opportunity to chart the future course of advertising together,” said Brian O’Kelley, CEO, AppNexus. “Combining AT&T’s incredible assets with our technology, we will help brands and marketers power new advertising experiences for consumers. It’s what the market is asking for, and together we’re poised to deliver it.”
The move gives AT&T a foothold in the digital advertsing sales arena, which is currently dominated by Facebook and Google.
As Wells Fargo Senior Analyst Jennifer Fritzsche noted in a Monday note to clients, “Here comes telecom to the advertising fishbowl! While T (and VZ) are still minnows in this bowl compared to the two big fish of FB and Google (Stabler/Sena), they are staking their claims to build their assets to be better able to complete.”
She noted that at the firm’s 5G conference last week, much of AT&T CEO Randall Stephenson’s talking points were dedicated to the company’s advertising ambitions.
“And then the third element is ad technology,” Stephenson said. “When you have those kind of direct-to-consumer relations, you have, we believe incredible insights to those customers. What are they watching? Where are they when they watch it? What times are they watching it? You begin to have understanding of the customer that is really, really unique. With ad technology, we’re demonstrating already with the small ad inventory we have today, that’s very powerful that you can create some serious value when you combine those.”
Financial terms were not disclosed, but a report from the Wall Street Journal last week pegged the deal at around $1.6 billion.
The transaction is expected to close during the third quarter of 2018.