AT&T may be plotting to revolutionize TV advertising

AT&T recently hired Brian Lesser away from GroupM where he was CEO to run a yet-to-be-named program that reports directly to CEO Randall Stephenson.

This combined with the proposed $84.5b acquisition of Time Warner is fueling speculation about the future of AT&T’s advertising offering.

Quote from John Stephens — CFO @ AT&T.
“Taking the viewership data, the data insights that we know that comes off our networks because we’re the delivery system. We deliver it, so we know what goes to the homes, what’s there. And on our addressable advertising, we’re getting close to $35, $40 CPMs. On our average, on our regular total advertising, it’s probably closer to $12, $13, so 3x that amount. That’s the reason for excitement. We’re getting that today, albeit as a distributor, you get 4 commercial slots an hour. As a content owner, you get 24 commercial slots an hour.”

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 (28spots x 3.5¢) if they accomplish #1 and #2.

No biggie. Just a 1,942% increase in revenue per viewing hour!

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