• by Mark Walsh  @markfwal, October 11, 2013

AT&T is shutting down the online and mobile ad network business operated within its AdWorks division.

The telecom giant launched the unit in 2011 with the aim of expanding its targeted advertising business, but has been forced to scale back after failing to compete with entrenched players in that arena, including Google and Facebook.

Instead, AdWorks said it will focus on advanced TV, mobile and online advertising within its owned and operated properties, including U-verse TV. AT&T confirmed to Business Insider, which first reported on the company ending its ad network experiment, that it would be cutting staff at AdWorks, but did not specify the number of layoffs.

According to a person with knowledge of the matter, more than 120 employees were let go as part of the restructuring, including Michael Rosen, VP, online and mobile sales at AdWorks. An AT&T spokesperson would not comment on the number of “surplussed” staffers, citing company policy. 

The division had hoped to build AT&T’s ad business by leveraging its wealth of subscriber data to precisely target advertising, based on users’ interests and behavior across mobile, the Web and TV. But it wasn’t able to grab a significant share of the mobile ad market, which is consolidating behind the scenes even as spending soars.

eMarketer estimates that Google and Facebook combined will account for more than two-thirds (68%) of projected worldwide mobile ad spending of $16.6 billion this year. Their growing dominance has led remaining independent mobile ad networks, like Millennial Media and Jumptap, to join forces in order to remain relevant.