Xandr, Formerly AppNexus, Is Now Formerly AT&T, After Its Acquisition By Microsoft – AdExchanger – AdExchanger

isthisthingfinallyhappeningAT&T has sold its ad tech business Xandr to Microsoft.

Terms of the deal were not disclosed.

The acquisition marks the end of a painful and unsuccessful run for the one-time leader of the programmatic industry, AppNexus, which was rebranded Xandr but never found a home within the AT&T organization.

Former AT&T CEO Randall Stephenson envisioned advertising as a third leg of what he termed a “modern media business,” with the other two being mobile and internet service and media. AT&T acquired the latter in an $85 billion deal for Time Warner in 2016.

But AppNexus turned out to be an awkward fit. It was swamped by AT&T’s legacy TV ad business – the AT&T AdWorks Lab – and by Time Warner’s ad sales. Neither had AppNexus’s programmatic chops, but both were still larger than AppNexus and profitable businesses.

AT&T hired Brian Lesser to lead the advertising group. But his plan for a TV advertising “community garden,” where AT&T mobile data could ratchet up ad rates for other broadcasters, never materialized.

contentbuffetAs with Verizon, which also acquired and then shed ad tech companies, AT&T’s strategy of mobile data-fused campaigns never cleared the right bars internally. Both companies decided in the end that the potential privacy and PR issues were not worth retaining the ad tech.

Microsoft is a logical endpoint for the former AppNexus business. It was an early investor in AppNexus and has been a flagship client since.

And regardless of the state of AppNexus tech, Microsoft will make good use of its engineering talent.

“With Xandr’s talent and technology, Microsoft can accelerate the delivery of its digital advertising and retail media solutions,” said Mikhail Parakhin, Microsoft’s president of web experiences, in a release.

But turn back the clock and AppNexus almost lost the Microsoft business in 2015 when Microsoft pitted AppNexus and AOL in a bakeoff for different parts of its ad sales. AOL, then owned by Verizon, won the lion’s share of Microsoft’s display ad business and made offers to 1,200 Microsoft employees.

Then-CEO Brian O’Kelley personally intervened, immediately flying to Seattle to make AppNexus’s case to retain the Microsoft business, and turning around what may have been a full-scale loss of the account, according to multiple sources.skiyalater

Microsoft also has lots of ad tech and media components where AppNexus expertise may come in handy. There’s the Bing search engine, Edge browser and the Windows Apps store, which is already a part of the AppNexus account, according to sources.

On top of that, Microsoft Xbox is an interesting advertising and identity asset, as is LinkedIn, which is also owned by Microsoft. Microsoft acquired cross-device startup Drawbridge cross-device for about $300 million in 2019 to beef up LinkedIn’s ad tech chops, and bought online retail marketing startup PromoteIQ in 2019 to help Microsoft diversify beyond its B2B roots.

psteinEven so, Microsoft is not often thought of as a big player in programmatic or data-driven TV advertising, which is the AppNexus legacy.

But Parakhin said that the Xandr deal will help Microsoft with its effort to win in the new digital ad marketplace in a way “that respects consumer privacy preferences, understands publishers’ relationships with consumers and helps advertisers meet their goals.”