• by Laurie Sullivan  @lauriesullivan, December 21, 2021

AT&T has agreed to sell its programmatic ad-tech unit Xandr to Microsoft. Terms of the deal were not disclosed.

“As the digital landscape evolves in a post-cookie world, Microsoft and Xandr together will help shape the digital ad marketplace of the future,” Mikhail Parakhin, president of web experiences at Microsoft, wrote in a post announcing the news on Tuesday, continuing: “One that respects consumer privacy preferences, understands publishers’ relationships with consumers and helps advertisers meet their goals.”

Parakhin believes Xandr will complement Microsoft’s advertising offerings and help accelerate delivery of digital ads and retail media solutions for the open web.

Since the completion of this transaction is subject to closing conditions and regulatory review, many questions remain unanswered, such as who will lead the group. “The acquisition is not completed until these closing requirements are finalized, [so] we have not started to integrate Xandr’s technology with our own,” a Microsoft spokesperson wrote in an email.

Some believe the integration -- although the two companies worked together for more than 10 years -- will present challenges.

“Microsoft has struggled in every digital media acquisition they’ve ever tried to make, including the DSP they bought for a lot -- Atlas $6.2 billion -- and then sold to Facebook for much less than 1% of the original price," wrote Mike Woosley, COO at Lotame, in an email to Search & Performance Marketing Daily. “Maybe now that they own LinkedIn they’ve had to reconsider digital media and are going to try it all over again."

Microsoft’s acquisition of Xandr from AT&T aims to improve advertising results through the first-party data-buying platform Xandr InvestOpens and strengthen monetization for publishers through Xandr MonetizeOpens, which includes a video solution; increase advertiser and publisher value on the Microsoft Audience Network; enhance retail media with Promote; and enable marketer to reach consumers across the open web through the Microsoft Customer Experience Platform.

The deal may also support Microsoft’s push into the living room with streaming video through Xbox.

Tal Chalozin, CTO and co-founder of Innovid, believes that Microsoft is still in a battle for the living room. “To have chance with Xbox, which has a good install base, they must have a play or at least a solution with ads,” he wrote in an email to Search & Performance Marketing Daily.

Xandr gives Microsoft a shot in connected television advertising, where the company currently is “weak,” and it should help to monetize the Xbox more effectively, wrote Shiv Gupta, managing partner of U of Digital, in an email to Search & Performance Marketing Daily.

The agreement builds on a decade-long relationship between Xandr -- including its predecessor companies -- and Microsoft for delivering global digital media solutions for advertisers. In July 2021, the two companies renewed a global contract to extend existing ventures

Microsoft at the time said it would extend its use of Xandr’s sell-side platform Xandr Monetize and its Global Supply Evangelism relationship with Xandr, as Microsoft expands and diversifies its monetization strategy -- focusing on increasing unique audiences for advertisers across premium display, video and native supply in more than 100 countries.