Xandr Inc. will sell online advertising platform. to Microsoft corp.
, ending its bid to become a major force in digital marketing.
Microsoft said Xandr’s digital advertising market will help boost its digital advertising and retail media capabilities. Financial terms were not disclosed. Last year, the Wall Street Journal reported that AT&T was considering a potential sale of its digital ad operations, as it scaled back its media ambitions.
AT&T acquired the advertising technology company formerly known as AppNexus in 2018 for $1.6 billion with the aim of challenging big companies like Alphabet Inc. Affiliated with Google and Meta Platforms Inc. Facebook in the digital advertising market.
Xandr’s online ad exchange allows advertisers to purchase space across thousands of websites and target audiences. AT&T executives had hoped to leverage the data packets the company was collecting from its various businesses — from the viewing preferences of DirecTV subscribers to where AT&T subscribers take their phones — to help advertisers spend their money more efficiently.
“I haven’t yet spoken to [chief marketing officer] Or an advertiser saying, “I wish I could spend more money with Google and Facebook,” then-AT&T CEO Randall Stephenson said in 2018 when discussing the company’s ambitions for Xandr.
The unit failed to deliver the explosive revenue growth its owners had hoped for, and often ran into technical problems. AT&T’s WarnerMedia unit — which includes Xandr — generated $1.4 billion in ad revenue in the third quarter, down 12% from a year earlier. It was just a fraction of AT&T’s total revenue of about $40 billion.
Xandr lost its CEO, Brian Lesser, early last year. Then the unit’s interim head, Kirk MacDonald, left in August, shortly after AT&T struck a deal to combine its WarnerMedia business with Discovery. company
AT&T’s decision to separate WarnerMedia was its latest move to weed out its big bet on entertainment and instead focus on its wireless business. Earlier this year, the company agreed to sell a stake in its DirecTV business to private equity firm TPG.
Microsoft is one of the many companies that have been investing in advertising technology lately. Digital advertising has been given a boost from the pandemic, as consumers staying at home are spending more time shopping online and watching videos and broadcasts. A wave of advertising technology companies have either sought deals or made them public this year.
“Microsoft has been focusing more on advertising in recent times,” said Brian Wieser, global head of business intelligence at GroupM, a media buying company within advertising giant WPP PLC. “Purchasing Xandr will definitely help them scale the business faster than would have been possible without it.”
Search advertising company Microsoft generated $8.5 billion in revenue in the year ending June 30, 2021, which is about 5% of the tech giant’s revenue. The company makes money by selling ads on various services, including the Bing search engine, business-focused social media platform LinkedIn, and its Xbox video game platform.
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It appeared in the December 22, 2021, print edition as “Microsoft Buys Ad Firm From AT&T.”