When Xandr launched in 2018, it had a grand vision to be the data-driven platform and ad marketplace for the TV industry.
But from the start, industry insiders were skeptical that plan would ever come to fruition, and few were surprised when Xandr announced last week it would fold into WarnerMedia.
“We kind of thought that was inevitable,” said Jane Clarke, CEO and managing director at the Coalition for Innovative Media Measurement.
Tracey Scheppach, CEO of TV consultancy Matter More Media, agreed: “[Xandr’s] initial ambition was to be the platform for all TV selling. I don’t think that was very realistic.”
It made sense to launch Xandr as a separate group under AT&T to focus on building tech capabilities, rather than meeting goals associated with inventory sales at WarnerMedia. But once it was ready to apply its tech and data to inventory, Xandr struggled to gain widespread access to linear media outside of DirecTV.
Xandr grew its addressable footprint through partnerships with cable operators such as Altice and Frontier, but programmers had competitive concerns about the platform representing their inventory. And while Xandr brought publishers such as VICE and Hearst into its Community marketplace, where buyers can enhance digital and OTT video buys with Xandr data, those relationships didn’t include linear TV.
Xandr also struggled to convert AppNexus into a TV and video buying platform, according to multiple TV industry and agency sources.
Unlike digital, TV buying is tied to content, events and sponsorships, and inventory is sliced up among programmers, MVPDs and OTT platforms. So it’s difficult to shift large pools of linear inventory into a digital SSP. Plus, programmatic is about optimizing a bid, while data-driven linear is focused on optimizing a prescheduled media plan.
“There’s a certain amount of TV that can be automated, but there’s still a certain amount that’s very curated,” Clarke said. “I don’t think they realized how complex it was.”
Most of Xandr’s revenue came from the legacy AT&T AdWorks addressable TV business, which sells DirecTV media and existed years before Xandr launched. AppNexus made up a single-digit percentage of Xandr’s total business, according to two people who worked at the company. A Xandr spokesperson said this figure was inaccurate and that global revenue from Xandr’s software products and addressable/linear TV sales are split 50-50.
“Xandr’s commitment to Xandr Monetize and Xandr Invest platforms remain unchanged," the spokesperson said in a statement. "We continue to build and scale a premium advertising marketplace for brands, publishers and consumers alike.”
Competition, ego and strategy shifts
Through its acquisition of linear SSP Clypd, Xandr lit up private marketplaces from Disney and AMC Networks on its DSP, Xandr Invest. But those integrations are RFP tools that allow buyers to optimize campaigns with Xandr data. Xandr doesn’t actually have rights to sell Disney and AMC inventory.
Programmers are comfortable with Xandr enabling data-driven linear with AT&T’s set-top box data, but they want to control their own inventory sales.
As Xandr worked toward its vision, strategy and leadership changes at AT&T were underway.
Former Xandr CEO Brian Lesser initially reported to former AT&T CEO Randall Stephenson. But after the telco received pressure from activist investor Elliott Management, its strategy shifted. Lesser began reporting into John Stankey, then the CEO of WarnerMedia and COO of AT&T.
Lesser and Stankey didn’t see eye to eye because Xandr needed access to more WarnerMedia inventory to achieve its sales goals, which would impede WarnerMedia’s own sales goals, according to a media agency exec who worked closely with Xandr. Lesser didn’t get the top job at WarnerMedia and resigned from Xandr in early March, and Stankey was promoted to CEO of AT&T in April.
Lesser’s successor, Kirk McDonald, now reports to WarnerMedia chief revenue officer Gerhard Zeiler, further pushing Xandr into a sales role vs. a technology play.
The COVID factor
When COVID-19 hit, plans to streamline at AT&T’s media divisions became even more pressing.
AT&T is challenged by shrinking linear TV advertising demand, movie studios closing and a crumbling pay-TV business. It’s banking on subscription revenue when HBO Max launches in May, and Xandr is well positioned to monetize its cross-platform video assets with its technology assets and AT&T’s data.
“In extreme times, you have to focus on winning in your areas of core competency,” said Dave Morgan, CEO of advanced TV platform Simulmedia. “Some things that may have been luxurious strategies, you just don't have time for.”
Integrating Xandr more tightly with WarnerMedia could light up more addressable inventory across its properties, which will be attractive to cash-strapped advertisers in the midst of a recession. The combination also aligns both sales teams around a common go-to-market that was previously confusing to buyers.
“When money comes back to the market, marketers are going to want it to work harder,” Scheppach said. “Xandr moving closer to inventory will enable that.”
Buyers now see Xandr as a platform where they can access all of WarnerMedia’s inventory across linear, addressable and digital, as well as one of the industry’s largest addressable TV footprints, and enhance buys with advanced targeting and measurement.
“[The reorg] suggests there will be more commitment to put Xandr front and center in WarnerMedia’s sales process,” said John Lee, chief product and data officer at the Dentsu agency Merkle. “It does not suggest that they’re doubling down on the technology as an open marketplace.”
Yet, buyers wonder if WarnerMedia has the appetite to continue investing in ad tech, particularly assets such as Clypd – and whether those tools will ever go beyond being an access point for AT&T data.
“Clypd provides a great platform for the AT&T data set to take a more dominant position as currency,” Lee said. “My question is, how much will they continue to invest in Clypd as an open market platform?”
James Hercher contributed.