AT&T Expects Targeted Advertising to Be Key to Higher Ad Revenues
AT&T (T) believes that the Time Warner (TWX) deal is more compelling today than when it was originally announced. The financial benefits of the deal are limited, but the strategic implications are more clear.
During the Goldman Sachs Communacopia Conference on September 12, 2017, Randall Stephenson, AT&T’s chief executive officer, highlighted the opportunity to drive value in media through targeted advertising. Stephenson said the proposed acquisition could provide Time Warner with robust viewership data to which AT&T has access through its distribution channels dedicated to targeted advertising. AT&T has just 200 billion impressions compared with 750 billion impressions for Time Warner. Stephenson also noted, “We are selling the addressable advertising within AT&T at a factor of two to three times what a company like Time Warner is able to get.”
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AT&T’s management also highlighted that the deal could give additional strength to the content creation team since Time Warner’s media creation team can make a sound decision about what content to create and for which platforms.
US programmatic ad market
There seems to be untapped potential in the US programmatic ad market. Programmatic ad spending in the United States has grown by two times from $10.4 billion in 2014 to $21.6 billion in 2016, as you can see in the above chart and according to an eMarketer report. It’s anticipated that this spending could surpass $27.0 billion in 2017. Video mobile programmatic ads could also gain popularity, which is currently dominated by Google (GOOG) and Facebook (FB).