AT&T’s Ambitious Plan to Take On Facebook and Google for Ad Dollars

Author

Michael Beach
June 19, 2018

Big news: The merger between AT&T and Time Warner has been approved by a federal judge.

The goal: Build an automated advertising platform that combines the best parts of digital (targeting/analytics) with premium video content.

Quote from Kelly Clark — CEO @ GroupM:“Our clients want the highest quality programming informed by the highest quality data with the least amount of waste,”

Why this matters: This will bring one of the top catalogs of content (HBO, etc.) under the same roof as the #1 pay-TV provider and #2 mobile provider.

Top pay-TV providers:
1) AT&T/DirecTV/Sling — 26.2M
2) Comcast — 21.2M
3) Charter Spectrum — 16.4M

Top mobile providers:
1) Verizon — 151.5M
2) AT&T — 143.8M

AT&T is well positioned to grow these subscriber numbers atmultiple price points.

Addressable TV homes in U.S.:
1) Total — 60M
2) AT&T/DirecTV/Sling — 15M (25% of total)

Quote from Tracey Scheppach– CEO @ Matter More Media:“The cost per thousand impressions — a common currency for pricing TV ad units — for a targeted ad aimed at specific households can top $60, compared to an average of $10 for a national ad.”

Interesting perspective. If AT&T offers addressable advertising AND owns the networks the following occurs:
1) Ad pricing — A single ad impression increases 192% from 1.2¢ to 3.5¢ due to improved targeting.

2) Inventory — The number of 30s spots available to AT&T increases 600% from 4 to 28 now that they are both the cable provider and content owner.

3) Total impact — AT&T currently makes roughly $0.05 per hour (4 spots x 1.2¢), but that could increase to $0.98 per hour (28 spots x 3.5¢) if they accomplish #1 and #2.

Key points for potential market size:
1) Only 15% of advertisers are fully using addressable TV advertising
2) Less than 3% of TV advertising spend is addressable

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