AT&T reported Q2 earnings Tuesday for the first time since its $85 billion acquisition of Time Warner, which it has renamed WarnerMedia, closed in June.
Revenue for AT&T’s Advertising and Analytics unit, which includes the AdWorks addressable TV group, grew 16% sequentially to $1.8 billion, CFO John Stephens said during Tuesday’s earnings call.
Advertising and Analytics CEO Brian Lesser, who was on the call alongside AT&T CEO Randall Stephenson and WarnerMedia CEO John Stankey, outlined plans for a cross-platform ad exchange powered by AT&T data.
Stephenson described AT&T as having the “elements of a modern media company,” which must now develop direct-to-consumer relationships.
On ad tech
AT&T’s data on 170 million subscribers will create insights to power new advertising models across WarnerMedia’s sports, entertainment and news content – eventually for other media owners, Lesser said.
On TV, for example, ads won’t look like traditional 30-second spots, but rather targeted branded integrations that connect back to measurable experiences on mobile.
“Traditional advertising doesn’t satisfy what brands and consumers are looking for,” Lesser said. “Because we have content and direct-to-consumer relationships over TV, phones and devices, we can start innovating the ad experience.”
While achieving that full vision is still a way out, there are some immediate things AT&T Advertising and Analytics can do to drive revenue in 2018. The group, for example, has already started using set-top box data from DirecTV to sell addressable inventory on Turner.
“We’re already showing the value of data and technology on our ad business,” Lesser said.
The advertising unit’s future success measures will hinge on its ability to increase yield on WarnerMedia inventory, Lesser said. And once AT&T’s $2 billion deal for AppNexus closes next quarter, Advertising and Analytics will continue developing its ad platform and build its ability to partner with media companies outside of AT&T.
“Our plan is nothing short of leading the industry in creating a premium ad marketplace across TV and digital by quickly integrating AT&T assets, including AppNexus,” he said.
Go, HBO
On the content side, Stankey and Stephenson talked about scale.
“Time Warner is the one scaled player that had a great distribution platform, scale in terms of ad inventory and scale in content,” Stephenson said. “Everything else was a distant second.”
Stankey addressed his ambitions to invest $2 billion in developing new HBO content and noted that Warner Brothers has its largest-ever slate of content in production for the 2018-19 season with 75 shows.
When asked about whether that investment can keep up with giants like Netflix, which is investing $8 billion in content this year, Stankey said he wasn’t worried.
“The race is on for scaling customer bases, not media content,” he said. “We’re in good shape in our ability to scale media content.”
AT&T’s consolidated revenues for the quarter, including two weeks of WarnerMedia earnings, were $39 billion, down from $39.8 billion year over year. At WarnerMedia, consolidated revenue for the 16 days included in the results were up 24% to $11.7 billion.
This post was syndicated from Ad Exchanger.