Advertising
- A year into AT&T and Time Warner's mega-merger, advertisers say that its ad-tech unit Xandr is ahead in the race to own addressable
advertising . - AT&T has also strengthened its programmatic tools that help advertisers target digital and TV ads and has built out a marketplace of premium publishers.
- Agencies worry that Xandr will limit access to its platform, although a Xandr VP insisted that "it's not the next walled garden."
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A year ago, AT&T unveiled a bold plan to build a technology and targeting platform, Xandr, that promised to reinvent the $70 billion TV industry through its $85 billion acquisition of Time Warner and reported $1.6 billion purchase of ad-tech firm AppNexus.
Led by advertising veteran Brian Lesser, Xandr is seeking to help advertisers and publishers buy, sell, and measure addressable advertising using AT&T's data, technology and content. Addressable advertising has long been talked about as a way to modernize how TV ads are bought and sold, and Xandr is one of several ad-tech companies working on a solution.
Key to Xandr's pitch to agencies is Jay Askinasi, VP and head of agency and digital partnerships at Xandr. He joined the company from Publicis Media in November to spearhead relationships with agencies and leads a team of people with agency, TV and ad-tech backgrounds.
"It's important for us to be fluent in all of the different terminology and the ways that we can work with an individual marketer or client," he told Business Insider.
According to four big agencies interviewed for this story, Xandr has been pitching itself to advertisers over the past year while remaining cautious of rolling out too many products for advertisers. Some pointed out that addressable advertising has been slow to take off generally - AT&T-owned Turner has said that audience-based buying makes up 5% of ad spend on Turner's properties - while others said that AT&T has been conservative about making its subscriber data available to advertisers due to privacy and compliance issues.
"These are customers beyond ad revenue - these are customers of a service," said Shelby Saville, chief investment officer at Spark Foundry. "It makes them maybe a little more thoughtful about what they'll step into versus testing a million things."
Xandr wants to shake up how video ads are bought and sold
Xandr has rolled out a number of new products over the past year, and agencies say that while they like Xandr's scale, it has to compete with a growing number of companies that are working on the same issues.
Xandr has created a premium video content marketplace called Community that advertisers can use to target video ads in WarnerMedia publishers like CNN and TNT as well as external publishers including A+E Networks, Vice Media, and Xumo. It's rolled out a new interface for how advertisers buy programmatic ads and hosted an upfront presentation to big agencies this past spring to pitch new tools that help advertisers target audiences like "light TV viewers" across TV and digital.
Saville said the agency has used Xandr's targeting tools to find hard-to-reach audiences that aren't watching TV. Xandr claims it can find audiences similar to TV viewers on digital, streaming and addressable platforms, for example.
OTT players like Hulu and Roku also sell advertisers tools to find linear cord-cutters on their streaming platforms, but Saville said that Xandr's scale gives it a leg up.
"The concept is not a new one," Saville said. "It's the holistic look at heavy and light TV viewers and how you look at both as a combined reach."
Another exec at a large media-buying firm argued that like Hulu and Roku, Xandr's targeting tools are limited to its own scope, though, so agencies still need to piece together data to see how all of their TV and digital ads perform.
"That is their light TV viewer; it's not everybody's light TV viewer," the exec said. "Every single one of us is looking for the secret sauce and promise of Xandr."
Xandr's Askinasi responded that its set-top box data allows advertisers to see all of the national TV ads they're running at a given time, data that's not available on streaming platforms.
One challenge for agencies is that they have internal turf wars over which of their video teams owns TV, digital and analytics. Askinasi said that because Xandr works across all three areas, it's been able to work with all those departments. But he admitted that navigating agencies' internal teams can be difficult.
"It's yet to be determined where it will live long-term, but I do think that agencies need to evolve because the clients don't necessarily care about agency politics - they want what's going to drive performance," he said.
Xandr is using its big footprint in addressable TV for advertisers
In addition to Community and its measurement and targeting tools, AT&T also owns a sizable amount of addressable ad space. And while addressable advertising represents a small portion of TV inventory today, Evan Hanlon, the chief strategy officer of GroupM US, said it's critical to AT&T's long-term advertising goal.
Addressable advertising lets marketers pinpoint audiences with TV ads based on criteria like household income or education, and AT&T was running a $2 billion business through its pay-TV services last year before Xandr launched. About 24 million households subscribe to AT&T's DirecTV and U-Verse pay-TV services, according to its first-quarter earnings. The services give AT&T about 38% control over the 64 million addressable households, according to a 2018 report from Video Advertising Bureau.
Xandr also has partnerships with Altice USA and Frontier Communications to sell addressable TV inventory nationally.
Xandr's Askinasi said that addressable advertising has traditionally been the domain of direct-response marketers like auto manufacturers or retailers, but that it's seen "massive" growth from large advertisers who can't reach consumers through national TV buys.
"Addressability is huge," said Erica Schmidt, global CEO of Cadreon, the programmatic media-buying division of Interpublic Group. "When we identify the right audiences and marry it with a device ID graph, you have a broad understanding of the individuals in a household and the best way to reach them."
"We're not the next walled garden."
All of the execs interviewed for this story expressed concern that Xandr will become a walled garden that limits the number of publishers and data that advertisers have access to.
Xandr wants to create a platform that advertisers use to buy ads across multiple TV networks and screens, which requires striking advertising and licensing deals with cable companies and networks.
TV networks have already been pooling resources for advertisers; NBCUniversal, Fox Corp. and Viacom belong to an advertising-targeting coalition called Open A.P., although WarnerMedia pulled out of the alliance in April.
GroupM's Hanlon said it's unclear how many competitors AT&T will work with, though. The worry for agencies is that if Xandr limits access to its platform to competitors or favors AT&T's existing advertisers, other advertisers will get less access to targeting data.
"I'm cautiously optimistic about what their approach will ultimately look like," Hanlon said. "That said, we understand the very real business and competitive pressures that exist."
"There is definite concern that coming from the AT&T side that they need to protect their data," Spark Foundry's Saville said. "The more walled gardens, the harder it is to understand what drives performance."
Askinasi wouldn't talk about publishers that Xandr will work with in the future, but sought to quell agency concerns.
"The fact that we're working with these other media publishers and that the company has been public about wanting to do more of that should go a long way in saying that we're not the next walled garden."