AT&T-AppNexus Talks Stir Interest -- WSJ
June 25 2018 - 3:02AM
Dow Jones News
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (June 25, 2018).
By Lara O'Reilly and Alexandra Bruell
CANNES, France -- News of AT&T Inc.'s talks to acquire
advertising technology firm AppNexus was welcomed by marketers, who
are eager to have more options in the online ad sector beyond
Google Inc. and Facebook Inc., the dominant players.
AT&T, which is fresh off its acquisition of Time Warner
Inc., has a treasure trove of TV and digital content from brands
such as CNN and TNT. Now the telecom giant is in talks to buy
AppNexus for $1.6 billion, a deal that would help it monetize that
content better, using data from wireless customers to serve highly
targeted ads.
"It's a lightning bolt across the industry," said Bob
Rupczynski, McDonald's global vice president of media and customer
relationship management, on the sidelines of the ad industry's
annual Cannes Lions festival on the French Riviera. Mr. Rupczynski
said the deal would give AT&T immediate infrastructure and more
data and could give marketers "more leverage" in dealing with
Google and Facebook.
"The more options we have available, the better it's going to be
for the market," said Antonio Lucio, chief marketing officer at
Hewlett-Packard Co.
Some industry executives speculated that AT&T could also
look for further advertising technology acquisitions in the coming
months to strengthen its offering to marketers.
AppNexus's technology helps advertisers buy ads using automated
systems, across swaths of websites and apps. The firm also supplies
technology to publishers so they can manage and sell the
advertising space on their websites. Its marketplace, which
connects the buyers and sellers of ads, also extends into video and
the web-connected TV space.
AppNexus's capabilities could be useful as AT&T launches new
streaming services of its own that aim to generate some revenue
from ads. On Thursday, the company unveiled a $15-a-month video
service offering a "skinny bundle" of TV channels. Unlimited data
plan subscribers will get free access to the service, which is
called WatchTV.
The AppNexus deal "would be a key step towards helping AT&T
build out a much more significant digital advertising business than
it currently has, " said Brian Wieser, a senior analyst at Pivotal
Research, in a note.
Marketers are all "very keen for diversification," said Quentin
George, founder of the ad-tech consultancy Unbound. "They're
concerned about their reliance on Facebook and Google."
Google took a 31.7% share of the $232.27 billion spent globally
on digital advertising last year, according to eMarketer, while
Facebook took a 17.9% share. Their market share in the U.S. is even
higher.
AppNexus should help AT&T develop a more advanced business
in targeted TV ads, said industry executives.
"It would provide some of the capabilities the company would
expect it needs in order to apply data and automation to
traditional TV advertising," said Mr. Wieser in his note. However,
he added, "we think this latter opportunity is relatively limited
in the near-term."
On closing the Time Warner deal, AT&T restructured the
combined company into four units, including an advertising and
analytics business. Brian Lesser, who was on the board of AppNexus,
joined last October from WPP's GroupM media-buying division to
oversee those operations.
If AT&T does acquire AppNexus, it is unclear whether it
would continue the ad tech firm's offering for third-party
publisher websites or focus on monetizing its own content with
ads.
"One has to ask how other media companies feel about working
with a very large competitor now that AT&T is a media company
via their Time Warner acquisition," said Anthony Katsur, senior
vice president of digital strategy at Nexstar Media Group. "That
could create a natural tension."
AT&T declined to comment.
Around one-third of AppNexus's business is in Europe, according
to people familiar with the matter. That means AT&T will also
need to be mindful of compliance with the region's sweeping new
General Data Protection Regulation, also known as GDPR.
One of AT&T's strongest assets is its customer data, said
Michael Nevins, chief marketing officer at Paris-based ad-tech
company Smart. "GDPR would certainly be one of the filters they
would have to be thinking through when they think about how they
activate that data [in Europe]," Mr. Nevins said.
Write to Lara O'Reilly at lara.o'reilly@wsj.com and Alexandra
Bruell at alexandra.bruell@wsj.com
(END) Dow Jones Newswires
June 25, 2018 02:47 ET (06:47 GMT)
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