In 2019, every major tech company is clamoring for a slice of the ad-tech market worth nearly $130 billion—and telcos are no exception. This week, ahead of the upcoming Cannes Lions International Festival of Creativity, both AT&T and Verizon said they have further developed their buy-side programmatic offerings.
AT&T’s media and advertising arm, Xandr, rolled out a proprietary marketplace meant to “unify” the siloed experience of buying linear TV, OTT and digital video in what is effectively an overhaul of the demand-side platform it obtained through its AppNexus acquisition.
Meanwhile, Verizon’s own media wing—Verizon Media—similarly announced an update to its DSP with the release of an “insights and forecasts” tool, meant to increase the transparency among media buyers using the tech to execute their media plans.
Neither telco has kept its ad-tech ambitions particularly quiet as of late, since Verizon inhaled the ad-tech operations of internet veterans Yahoo and AOL in 2017 and AT&T acquired the programmatic company AppNexus not too long after that. In both cases, the pivot to programmatic was all about following the money, said Kevin Mannion, the chief strategy officer at the advertising analytics firm Advertiser Perceptions.
“Around this time, both of these companies had to ask where people are accessing their information now—and everything pointed towards programmatic, towards digital video, and towards mobile advertising,” he said. “And the companies with the biggest advantage in each of these spaces are Google and Facebook. So you could read each of these announcements and say AT&T and Verizon are both realizing that, down the road, they’re ultimately competing with those companies.”
And that competition is fierce.
Recent research from eMarketer found that the oft-cited “digital duopoly” of Facebook and Google will still continue to rake in the lion’s share of digital ad spend, regardless of the scandals both companies seem to weather with increasing frequency.
As Mannion pointed out, big telco has something that big tech doesn’t: vast troves of user data, which are incredibly valuable for advertisers. However, he added, a strong data set doesn’t necessarily make for a strong ad-tech company: Both Xandr and Verizon have had less-than-stellar receptions from the media-buying community in the past. According to a recent survey by Mannion’s firm, both companies’ buy-side offerings trailed behind those offered by Mediamath, Amazon and Google.
The Advertiser Perceptions report surveyed the opinion of more than 400 media buyers about competition in the DSP market and found that each of the telcos are afflicted by their own plights.
“AppNexus’ roots go way back,” said Mannion. “They were one of the leaders on both the DSP and SSP side.”
But roughly two years ago, he noticed that the company’s DSP was starting to “lose traction,” while the SSP was starting to “accelerate” and only become stronger.
“While AppNexus wouldn’t say anything publicly about the pivot at the time, the findings would indicate that they were much more focused on their sell-side platform,” he said. “And that tells us the choice they were making.”
Mannion speculated that there’s a chance the company saw the sell-side as a more finite marketplace and an easier space to compete in, rather than battling against the buy-side offerings of the dreaded duopoly. Now, with the backing of telco powerhouse AT&T as an owner, it would make sense that the company now has the courage—and, more importantly, cash—to double down on its buy-side tools.
Meanwhile, Verizon Media’s less-than-perfect buy-side reputation is less about tenacity and more about identity. As opposed to AT&T, which, through its AppNexus operations, has always had a wing solely focused on ad-tech, Verizon Media’s acquisitions of companies like Yahoo and AOL brought not only these companies’ respective ad-tech stacks but also their media brands.
Although Yahoo’s original ad stack, BrightRoll, was traditionally a strong player in the ad-tech ecosystem, those perceptions turned once the stack was integrated under the Oath brand, Mannion said. Not only that, but advertisers began griping that Oath’s ad server wasn’t as innovative, intuitive or solid as others in the space, which is most likely why Verizon Media announced that the company would shutter the server within the coming year.
“Verizon’s always been something of a media company as well as an ad-tech company through its AOL and Yahoo acquisitions, and, in the past, it was hard to say if Verizon was committed to these brands,” he said. “But I think their latest announcement says that they are and that they’re more committed than ever.”