Targeted television ads
The advertising prospects of AT&T’s (T) merger with Time Warner (TWX) may not seem to be much of a threat to Internet advertising juggernauts Google and Facebook (FB). However, by understanding AT&T’s idea of future television advertising, you can see why Google and Facebook should be afraid.
AT&T is looking to a future where it will be able to provide targeted TV ads that rival digital ads. Targeted advertising allows marketers to pick and choose the audiences that they want their campaigns to reach. Internet companies such as Alphabet’s (GOOGL) Google, Facebook, and Twitter (TWTR) have excelled in this area, partly because targeted ads command higher prices.
Targeted advertising is one of the reasons the traditional media advertising market is shrinking. Besides allowing marketers to select the TV audience they want to reach, AT&T also wants to allow advertisers to purchase ad placements automatically. This practice is known in the industry as programmatic advertising—which is another area where Google and Facebook are doing well.
According to market intelligence company eMarketer, US TV programmatic ad spending will grow 75.7% this year to $1.1 billion, and then grow further to reach $4.0 billion by 2019.
With AT&T expanding its television-targeted and programmatic ad services, Internet ad providers such as Google, Facebook, and Twitter will see increased competition. Since some marketers are already uncomfortable with how powerful Google and Facebook have become in the advertising industry, AT&T could emerge as an important third force and rattle these online advertising giants.