With AppNexus Acquisition, AT&T Stakes Claim in Adtech, Analytics

[Updated 3:51 p.m. See Below.] AT&T is buying advertising tech company AppNexus in a deal reportedly worth around $1.6 billion. The telecom giant plans to add AppNexus to an advertising and analytics business that it created last year.

The purchase shows AT&T’s (NYSE: T) interest in better utilizing its vast amounts of customer data so that it can more effectively sell ads, in display, audio, video, or other formats. New York-based AppNexus works with everyone from publishers to ad agencies to marketers, offering “programmatic” services that let both buyers and sellers customize their advertisements, including by using analytics from user data.

AT&T says it has more than 170 million direct-to-consumer relationships in its wireless, video, and broadband businesses. Last year, Dallas-based AT&T decided it would build an advertising and analytics business to utilize its “unique customer data and growing content assets”—at the time, AT&T had a pending $85.4 billion acquisition of Time Warner, which closed this month.

“Advertising is evolving from broad messages delivered through traditional media channels, to customized, individual content coordinated across all connected devices,” said Brian Lesser, who was hired in 2017 to be the CEO of the advertising and analytics business, in a news release last year. Lesser previously worked at divisions of London media agency WPP.

The acquisition may also create more competition for Facebook and Google, which have dominated the online ad market, AdAge reported this morning. Mike Baker, CEO at adtech company DataXu, told AdAge that while AppNexus gives AT&T the “missing plumbing” it needs for its advertising business, AT&T still needs to tie together all its consumer data for the analytics end of things.

AppNexus, which was founded in 2007, has taken in hundreds of millions of dollars in investment, including a $31 million strategic round of funding in 2016, $10 million of which came from News Corp (NASDAQ: NWSA). WPP also invested $25 million as part of a $110 million funding round for AppNexus in 2014.

PitchBook lists the amount of the merger or acquisition as worth $2 billion. The Wall Street Journal reported last week that AT&T was expected to pay around $1.6 billion, citing sources. [Updated to clarify who reported the deal value.]

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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