The Princeton, N.J., ad tech company uses data from set-top boxes to tailor commercials to households. The acquirers, which did not disclose financial terms of the deal, said they anticipated the transaction would close in the first quarter of 2017.
AT&T will hold a controlling interest in Invidi, which will operate independently, although the companies will name representatives to its board of directors.
AT&T, which last month said it would acquire Time Warner (TWX) in a stock-and-cash deal valued at $86.5 billion, has made clear it wants to increase ad sales on its pay-TV platforms and also online. Later this month, AT&T is expected to unveil DirecTV Now, a multichannel streaming platform aimed at the roughly 10 million households that don't subscribe to pay-TV.
Invidi is expected to help with both pay-TV and online sales, using information about a user's internet habits to better determine what advertisements they would want to see over their pay-TV service. The new venture is expected to bolster AT&T AdWorks, the company's in-house ad-sales group, which sells inventory on its U-verse cable TV platform and DirecTV, both of which have been losing subscribers in recent years.
"In light of the cable-cutting phenomenon and the lack of targeting in TV, adding this additional layer makes it that much more appealing for the marketer," said Mel Stern, media communications director at New York digital ad agency Walrus. "TV might be declining, but there's nothing like the power of a TV spot compared to a banner or a search ad. Sight, sound and motion is still unrivaled."
For Dish and AT&T, it's an investment in being able to better monetize their advertising inventory by using programmatic technologies to target individual households through traditional TV.
"Addressable TV is seen a panacea for the TV business, something that can save linear TV," said Barry Lowenthal, president of The Media Kitchen, a New York digital advertising agency. "It's technology that's been around for a while but only recently has it really been perfected."
The deal comes as ad tech companies have been forced to retrench as the market for the automated buying and selling of advertising across the web hasn't emerged in the quantity some observers, and investors, anticipated. Among ad tech companies that went public in 2014 and 2015, most have struggled as an initial shine wore off.
Shares of Rubicon Project (RUBI) , for example, have lost 51% this year while Rocket Fuel (FUEL) has dropped 43%. Before agreeing to an acquisition earlier this month by Adobe Systems (ADBE) , ad tech provider TubeMogul's (TUBE) shares had fallen 44% in 2016.
Invidi, which has not gone public, received funding from WPP back in 2007, the very early days of ad tech. Unlike digital advertising, which allows marketers to mine enormous pools of information based on browser history, TV viewing historically only has provided information based on gender and age.
"Programmatic takes all the data that we use in our digital targeting and applies that to TV," Stern added. "That's really the holy grail of TV advertising, and something everyone in the industry wants moving forward."
Indeed, just two weeks ago, Dolan Family Ventures, a new fund launched by former Cablevision executives Kristin Dolan and James Dolan, acquired Analytics Media Group, which will work with newly established 605 to integrate and analyze data from partners' set-top boxes.
WPP, one of the world's largest advertising conglomerates, stands to benefit from the involvement of AT&T and Dish on the Invidi deal, providing the firm access to large global pay-TV platforms as well as technology to attract marketers who might still be skeptical about the effectiveness of targeted advertising using a set-box.Adobe is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells ADBE ? Learn more now .