Microsoft’s buy of Xandr from AT&T in late 2021 may need appeared like an embrace of third-party advert tech.
However whereas elements of the Xandr tech are thought-about precious by Microsoft, the way forward for Xandr as an SSP built-in with hundreds of outdoor publishers is doubtful.
Since finishing the acquisition in June of final yr, Microsoft Promoting has shifted its focus to first-party merchandise and integrations to win and safe key accounts, corresponding to Netflix, in keeping with a number of sources with direct data of latest adjustments throughout the group.
Xandr’s third-party advert tech isn’t below a strategic assessment to discover a purchaser. Fairly, Microsoft Promoting is evaluating how Xandr matches into the general Microsoft enterprise and has enlisted outdoors consultants to advise.
AdExchanger has realized that considered one of these consultants is FreeWheel’s former product chief, Jon Whitticom, who can also be an advisor to Netflix on the streamer’s nascent promoting platform. (Netflix chosen Microsoft as its international advert tech and gross sales accomplice in July.)
Though Microsoft isn’t seeking to flip Xandr, the staff has gone by way of a serious reorg as a part of the plan to make use of Xandr as a help system for Microsoft’s first-party companies.
The shift towards first social gathering will contain merging Xandr with PromoteIQ, the retail advert tech enterprise Microsoft acquired in 2019, in keeping with two present Microsoft workers and two who have been lately let go. They are saying Microsoft can even combine Xandr with Microsoft Groups, Outlook, Bing and Xbox, along with utilizing it to help the Netflix CTV gross sales account.
Does Microsoft even need third-party tech?
A Microsoft spokesperson informed AdExchanger that the corporate stays “dedicated to our end-to-end platforms that assist our purchasers attain the audiences they want wherever they’re throughout the open internet. Nothing has modified right here.”
But actions converse louder than phrases.
Present and former Microsoft workers informed AdExchanger that Microsoft Promoting treats the Netflix CTV gross sales account as if it’s a first-party product – much like its unique industrial partnership with LinkedIn. (Though Microsoft acquired LinkedIn in 2016, it operates as its personal fiefdom throughout the bigger Microsoft org.)
Microsoft’s strikes aren’t distinctive.
The entire market has been shifting away from third-party tech. Google’s Efficiency Max, Meta Benefit Procuring Campaigns and Walmart Join are clear examples of how the largest corporations are betting on first-party information and owned media.
On the opposite finish of the spectrum, unbiased third-party SSPs have struggled. Magnite lately ditched its pure-play SSP standing, Yahoo deserted its SSP enterprise, and Massive Village, which operated an SSP referred to as EMX, merely went bankrupt.
It’s no surprise Microsoft is reconsidering Xandr’s third-party SSP enterprise, what one may consider as legacy AppNexus.
Xandr reimagined
However Microsoft isn’t utterly abandoning Xandr’s third-party advert tech roots.
“It isn’t like they’re giving up on the SSP and DSP,” one present Xandr exec stated.
But as a result of layoffs have affected each a part of Microsoft, there are fewer folks to deal with help tickets.
As a result of layoffs and restructuring, there are additionally “extra calls for” on the Xandr group now, stated one Microsoft Promoting worker who’s been with AppNexus since 2015. These calls for come from inside stakeholders corresponding to Microsoft Azure, Bing and different high-priority models within the firm.
Taking part in a supporting function is a troublesome reckoning for the expertise previously generally known as AppNexus, stated one other longtime AppNexus/Xandr vet who was laid off earlier this yr.
Earlier than being acquired by Microsoft, PromoteIQ was inconsequential as a standalone retail SSP vendor in comparison with AppNexus. PromoteIQ introduced a mere 30 or so workers to Microsoft, whereas Xandr got here with greater than 1,000 folks.
However becoming into Microsoft Promoting is completely different than profitable on the LUMAscape.
Inside Microsoft, PromoteIQ’s standing is as nice if not higher than Xandr, in keeping with the lately laid off AppNexus worker, as a result of retail media is a excessive precedence and third-party advert tech isn’t.
Reminiscence lane
To grasp Microsoft Promoting’s relationship with Xandr, one should wind again the clock to 2010 when AppNexus declined an acquisition provide by AOL in favor of a industrial partnership with and funding from Microsoft.
In 2015, AOL seemingly had its revenge after Microsoft awarded AOL an enormous show promoting deal, ripped from the jaws of AppNexus. In trade for Verizon-owned AOL switching from Google to Bing as its default search engine, Microsoft gave AOL nearly all of the MSN show advert enterprise.
Microsoft knowledgeable AppNexus that AOL can be taking up the whole enterprise. However in a virtually unheard-of account-management play, AppNexus CEO Brian O’Kelley and President Michael Rubenstein flew to Seattle to petition for the account, sources informed AdExchanger.
The Microsoft promoting group, then led by Rik van der Kooi, put AOL and AppNexus in a one-sided bake off, with AOL promoting the very best elements of MSN and Bing whereas AppNexus retained pockets of MSN and different miscellaneous elements of Microsoft’s companies.
AppNexus didn’t come to play, although. It created a Microsoft-specific options staff to develop merchandise for Microsoft, in keeping with three sources who have been on AppNexus’s Microsoft staff. This staff developed what at present can be referred to as programmatic assured and personal market offers.
The depth of product work that AppNexus put in as a vendor to retain Microsoft – which on the time was a determined concession to protect a toehold on the account – set the stage for a way gross sales and engineering are actually used throughout the Microsoft fortress.
No third social gathering, no drawback
Zipping again to the present day, one may surprise why Microsoft acquired third-party advert tech if it didn’t intend to make use of it to its full potential throughout the open web.
However for Microsoft, the Xandr deal can repay in an enormous means if it’s capable of assist the promoting unit wring extra media income from owned-and-operated surfaces, together with Xbox, Microsoft Outlook and Microsoft’s app retailer, stated Ana Milicevic, a principal at media and advertising and marketing consultancy Sparrow Advisers.
And to meet that ambition, Microsoft nonetheless wants programmatic execs.
Because the newest reorg in March, the adverts group has prioritized programmatic experience – significantly AppNexus vets who’re aware of Microsoft’s inside options.
One developer who was a part of the options staff that AppNexus created for Microsoft through the AOL drama informed AdExchanger that due to this deep data “we at all times assumed Microsoft would purchase us, even [during] the AT&T stint.”
“We’re the old-school IT folks for them,” the developer stated, “the one ones who understand how all this bizarre Microsoft stuff works.”
