AT&T’s Xandr segment continues to grow
AT&T’s (T) advertising and analytics segment, which is known as Xandr, consistently showed growth in 2018. Xandr includes AppNexus, AdWorks (AT&T’s advanced TV business), and AT&T’s data and analytics business.
The segment’s total revenue rose 49% YoY (year-over-year) in the fourth quarter backed by a robust political ad season, while it rose 26% YoY excluding the acquisition impact of AppNexus. Its EBITDA rose 17% YoY to $386 million in the quarter.
AT&T’s acquisition of online advertising company AppNexus further added to AT&T’s ad-supported premium video content portfolio, which also includes Turner Networks, Audience Network, and Otter Media. Xandr uses consumers’ data, premium content, distribution, and targeted technology to drive ad offerings to AT&T’s wireless and TV subscribers. The division also aims to provide compelling ads to TV and mobile audiences.
The company is working with cable providers Altice USA and Frontier Communications as TV ad partners and is planning to add more partners. AT&T, through addressable TV, will combine data with advertising technology to allow advertisers to reach their audiences more effectively. Xandr and WarnerMedia’s Turner recently collaborated to improve and boost performance and speed for advertisers.
Competition in the targeted advertising business
AT&T competes with the dominant players such as Alphabet’s (GOOGL) Google and Facebook (FB) in the targeted ad business. Amazon (AMZN) is also expanding rapidly in the space, and according to eMarketer, it’s secured the third-place spot in terms of US digital advertising after Facebook and Google. Verizon’s (VZ) Oath, Snap, and Microsoft are also small players in the industry. Overall, US digital ad spending is poised to grow from $13.23 billion in 2017 to ~$22.18 billion in 2021.