Episode 18: Microsoft Acquired Xandr: Improves Ad Offerings

Transcription:

Devin:

You’re listening to Digital Marketing Mondays. Each week, we bring you new and exciting content from around the marketing industry, and help give you the marketer insights into what’s happening. We’ll offer our advice and share some takeaways to help you develop better strategies for your marketing. Ideally, this will also help you improve your ROI as well. So with that, let’s tune into this week’s episode.

Hans:

All right. Good morning, Devin.

Devin:

Good morning. What have we got today?

Hans:

Well, I’ve been hearing about this outfit called Xandr, with an X, I believe. And they have recently been purchased by AT&T. No, I’m sorry. They were owned by AT&T and sold to Microsoft, correct?

Devin:

Yep.

Devin:

And so what are the implications of that? Because AT&T, we think about them as TV and entertainment and communications people. We think of Microsoft… Well, Microsoft has a search engine called Bing, and they serve search ads, and they’ve got LinkedIn. So how does this all fit into the picture? Where do you think this is going?

Devin:

Yeah, it’s probably one of the most interesting acquisitions that I think will take place in 2022, at this point. It was actually announced very quietly right before Christmas break. And I think what’s interesting about this is AT&T acquired Xandr not too long ago. And I think their hopes was they’re going to bring in all this programmatic and digital technology, and integrate it with their DirecTV online streaming offer that they had. The issue is that I think AT&T has a pretty limited dataset compared to Microsoft, when you look at their whole suite of options. And I think AT&T really hemorrhaged a lot of money to try and make this thing sing for them, and, ultimately, it didn’t work. So selling to Microsoft, I think, was actually a great move. What I believe this does, on the other side of the coin, is that it’s really going to help bump up Microsoft’s ad offerings, both giving more monetization opportunities for publishers, as well as obviously adding a DSP-style programmatic ad offering for retailers, for businesses.

Devin:

And certainly Microsoft has boatloads, boatloads, boatloads of first-party data, even information coming out of LinkedIn, coming out of all the Microsoft users. So this is really a marriage that, I think, will take a huge chunk out of the duopoly of Google and Facebook, in terms of advertising. And that’s why I’m particularly excited about it. So I think this is going to be a big opportunity for Microsoft.

Hans:

Yeah. It’s interesting because I think Microsoft… The problem with Microsoft traditionally has been, or their challenge has been, their reach. I mean, you got good reach in the B2B world with LinkedIn, but their search engine can’t hold a candle to Google. So if you advertise on Bing, I mean, you just can’t spend the money if you’re doing search ads on Bing, because not that many people use Bing. Now, having said that, Bing is the search engine that’s under duckduckgo, which is great for people who want privacy. And it’s also the default search engine in Windows, so if you’re running Edge or something like that, the default search engine’s Bing. So I think their market share may be growing, but they’re still up against the 900-pound gorilla. And I think… Correct me if I’m wrong, but I think this gives them much better reach, so if you do use the Microsoft Ad Platform, you’re going to be able to spend that money. You’re going to be able to reach more people and generate more business as a result, potentially.

Devin:

Exactly. Yeah, I think that’s always been Microsoft’s big challenge with the advertising space. And that was one of the reasons why I think LinkedIn looked very attractive to them early in the game. They understood that it was the only social platform that they could really control well, and they knew that there was a big opportunity for business professionals. So that was a very strategic move on their part. I think they’re seeing the value of having LinkedIn in their back pocket. It’s generating boatloads of money for Microsoft.

Hans:

I’ll bet.

Devin:

And so this was just another opportunity to be able to expand their digital footprint and add more technology, because really that’s what they need. They need more inventory available for people to purchase. And acquiring Xandr, I think, will allow them to do that in that connected TV and programmatic space, which they just don’t historically have. They currently don’t have that offering, so this is going to be a great way to expand on that.

Hans:

So Xandr’s going to be able to allow them to serve ads, not so much on a computer, or, let’s say, a handheld device, but a connected TV? Which could be casting from your phone, correct?

Devin:

Yeah. And what I think the dream is in my side, or just how I’m picturing this is, imagine being able to go into the Microsoft Ads Platform and say, “All right, I want to use this audience from LinkedIn.” So I’m targeting X professionals at Y companies with Z scale.

Hans:

Yep.

Devin:

I want to target them with image ads and video ads on LinkedIn, or maybe even just image ads. And then on the actual Microsoft Ads Platform, bring that audience over and then say, “All right, now I want to show of them connected TV ads, and some other programmatic banners.” And then remarket to them using that technology. I think that future is not too far away.

Hans:

Yeah.

Devin:

We’ve certainly seen a huge step in inroads for other programmatic and self-serve ad platforms have just gone gangbusters in 2021. And I think that will continue to hold steady in 2022. This is another step in that direction. And it’s easy to dream, right?

Hans:

Yeah.

Devin:

But that’s my hope is we’ll be able to get to that place in the future where we can leverage LinkedIn data, leverage the existing Microsoft Ads data around searches, and be able to just have another avenue for getting ads out there.

Hans:

All right. So I know you don’t have a crystal ball, but when might we see… I mean, this acquisition just took place. Literally, less than a month ago.

Devin:

It was just announced.

Hans:

Okay.

Devin:

It probably will take a good chunk of 2022 to actually see any type of fruit coming out of this.

Hans:

Right.

Devin:

What’s been interesting is that Microsoft acquired LinkedIn several years ago. And it’s been a little slower than I think people wanted in terms of getting LinkedIn data brought into Microsoft Ads. Which, spoiler, if you’re not familiar with Microsoft Ads enough, there is actual LinkedIn data that you could be using for observational purposes only, at the moment, though it’s expected to be released for targeting options exclusively here in the near future.

Hans:

Okay.

Devin:

But that migration, or that connection, took a couple years to actually make happen.

Hans:

Yeah.

Devin:

So I think it may be… We probably are still a couple years out from actually seeing Xandr being integrated pretty heavily with Microsoft, but you never know. The other thing you’ve got to keep in mind is, well, Microsoft is a ginormous company with a lot of arms. They are pretty nimble. They stay quiet. They’re not as well publicized as Apple and Google and Facebook are, but they make some pretty quick moves, and they will do the things that certainly benefit their bottom line and their shareholders. So they’re ultimately… They stand to benefit from adding this in sooner rather than later, especially considering this ad market being as diverse as it is. Which actually brings up one other quick point. CloudFlare announced the world’s most popular websites for 2021. And for the first time ever Google is dethroned, or what seems like the first time ever, Google is dethroned.

Hans:

Wow.

Devin:

For TikTok of all platforms.

Hans:

TikTok? Get out.

Devin:

Yeah, I know. I know. So if you’re a B2C marketer going after Gen Z, you need to seriously consider your content strategy, both organically and paid on that platform. Because it’s now officially the most popular, or most visited, website in the world in 2021. And I suspect that will only continue in 2022. They have a billion users.

Hans:

I’m feeling older and older, but… Sorry, I’m feeling older and older by the day here, Devin.

Devin:

I know, I know me too. Me too. I don’t get it, but, hey, let the Gen Zs go dance however they want.

Hans:

Hey, people like what they like.

Devin:

Yeah. So I think the bottom line is there’s a day of reckoning coming for Google and for Facebook.

Hans:

Yeah.

Devin:

Now’s a great time to start exploring what other avenues and platforms are out there. And I’m really, really hopeful that 2022, Xandr can make some. There could be some end roads with integrating into the Microsoft Ads Platform, and chipping away at dethroning both Google and Facebook, in terms of that ad platform duopoly they currently hold.

Hans:

That sounds great. That sounds great. That’s very promising.

Devin:

Yes, it is.

Hans:

All right. Well, thanks Devin. That’s been a good wrap for the morning. I liked that.

Devin:

Yeah. Yeah. Definitely an interesting game. So stay on the lookout for more interesting news like this. I’m sure there’s going to be a lot more happening in 2022.

Hans:

All right. Thanks.

Devin:

Thanks.

Devin:

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