AT&T has announced it will acquire AppNexus, one of the largest privately-owned ad exchanges. Terms of the deal were not disclosed, but The Wall Street Journal reports that the price tag is around $1.6 billion.
Why it matters: The acquisition will help AT&T build its automated digital advertising business that could compete with Google and Facebook’s massive duopoly.
What is AppNexus? AppNexus is a digital ad exchange — or a company that uses technology to optimize automated advertising bidding across digital properties, like websites and apps. Its main competitors are other ad tech companies that experienced high periods of growth between 2011 and 2013, like PubMatic and Criteo.
The backstory: There were reports last year that AppNexus, like some of its ad tech rivals, would go public. Many have instead sought buyers in a harsh ad tech landscape. Other tech companies, like Salesforce and Oracle, have recently invested in ad tech companies valued at roughly $850 million.
The company will become a part of the growing ad stack being developed by AT&T advertising and analytics CEO Brian Lesser. Cheddar first reported that AT&T was eyeing the acquisition last week.
The big picture: AT&T recently closed an $85 billion deal to buy Time Warner and developing a digital advertising business was a big part of its pursuit of the content company. AT&T hopes an automated ad business will bring it a new revenue stream that can help subsidize pay TV losses as more people cut the cord.
