AT&T: Addressable advertising CPMs up to $40, 3x traditional ads

AT&T’s CFO said today that the company’s “addressable advertising” business continues to grow and today commands CPMs of up to $40—a figure he said is three times more than what the company’s standard advertising business can generate.

“We are having a great experience in our U-verse platform, and adding to that the DTV [DirectTV] platform in doing addressable advertising,” John Stephens, AT&T’s SVP and CFO, said today at an investor event. “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’s in the homes and what’s there—and on our addressable advertising we’re getting close to $35-40 CPMs. On our average, regular total advertising, it’s closer to $12, $13—so three times that amount. That’s the reason for the excitement.”

CPM, or cost per thousand, is a marketing term used to mark the price of 1,000 advertisement impressions. AT&T’s AdWorks business has argued that, via the integration of DirecTV customer data and AT&T customer data, it can serve “household specific” TV advertising based on an advertiser-defined target. “Addressable TV can help you serve your message to the best qualified households virtually each time—instead of leaving that to chance,” the company argues on its website.

Indeed, AT&T is working to expand this business; the company just last week announced it hired Brian Lesser to build and lead an “advertising and analytics business” using AT&T’s unique customer data and growing content assets. Lesser will be CEO of the business and report to AT&T Chairman and CEO Randall Stephenson. Lesser previously worked at GroupM North America, one of the world’s largest media investment management organizations.

Advertising and analytics “takes us to the next step and progression of AT&T,” Stephens said, noting that the hiring of Lesser and the creation of the advertising and analytics business represents “the next key for the overall vision of our company.”

“We continue to be very excited,” Stephens added.

Indeed, Stephens explained that the expansion of AT&T’s addressable advertising business, coupled with its pending acquisition of Time Warner, could even reduce the overall amount of advertisements AT&T’s customers see.

“We’ll have a unique opportunity to do much more targeted advertising to get higher CPMs, possibly to take commercials out of shows, because you’re getting more revenue per commercial and increasing the quality of the viewing experience by reducing the number of commercials we show.”

Stephens explained further: “When you take that and put Time Warner’s content with it, Turner’s content with it, you get really excited. Because it’s the opportunity to not only improve average revenues per CPM, but maybe it takes some commercial units out and improve the quality, the stickiness of the content. And so it’s a virtuous cycle of benefits.”