AT&T said it would fold its stand-alone Xandr ad-tech unit into WarnerMedia, just weeks after the CEO of Xandr abruptly departed.

Gerhard Zeiler,  who was named chief revenue officer of WarnerMedia last year, and oversees advertising, distribution and international operations, will supervise all ad-sales outreach across AT&T going forward, the company said. Kirk McDonald, chief business officer of Xandr, will continue to lead the unit, reporting to Zeiler. The Xandr team will operate separately from WarnerMedia’s ad-sales efforts, but the two units have been working more closely in recent months. 

The move represents a reversal of hopes for Xandr, which was formed as a separate business in 2017 just as AT&T was pursuing its $85.4 billion purchase of the media conglomerate previously known as Time Warner. AT&T hired Brian Lesser, a top executive at WPP’s large GroupM media-buying operation, to build a business aimed at helping advertisers use data to place marketing pitches more precisely and create new commercial formats that could be used in streaming video and broadband venues.

Indeed, Lesser initially reported directly to Randall Stephenson, the chairman and CEO of AT&T. In August of 2018, AT&T spent a reported $1.6 billion to buy ad-tech firm AppNexus, which operates online ad exchanges that help advertisers target specific consumer audiences by placing ads across dozens of websites.

Stephenson will step down as CEO in July, and John Stankey, who is currently the telecom giant’s chief operating officer, will succeed him.

The decision to combine the two businesses comes amid an expectation of a severe pullback in ad spending due to the coronavirus pandemic. Travel advertisers, movie studios and automotive marketers are among the Madison Avenue categories that have throttled back on marketing in recent weeks. AT&T’s decision could spur questions about other ad-tech operations at rival concerns. Comcast, for example, operates FreeWheel, a unit that operates separately from NBCUniversal’s large ad-sales operations.

AT&T launched Xandr – the name is a tip of the hat to Alexander Graham Bell, inventor of the telephone – with great fanfare. Madison Avenue was so interested in hearing more about the unit that many agency luminaries traveled to Santa Barbara conferences for two consecutive autumns to hear Lesser discuss how Xandr would help make TV advertising as efficient and targeted as the commercials that appear on digital media, where marketers can use data and IP addresses to determine more about a consumer than just gender or age

And yet, AT&T found having two distinct teams talking with advertisers and media buyers created confusion in the marketplace. After helping to found Open AP, an industry consortium devoted to helping advertisers create new consumer-data measurements that can be used across different TV  networks, WarnerMedia pulled out after the AT&T merger, largely because Xandr hoped to chart its own course in that business, Despite making progress – Xandr’s revenue in the fourth quarter of 2019 came to $607 million, compared with $381 million in the fourth quarter of 2017 – the company was increasingly paired with WarnerMedia’s own Madison Avenue outreach.

“We are in unprecedented times that amplify the priority across both WarnerMedia and Xandr, to deliver valuable results and outcomes for our agencies and clients,” said Zeiler, in a prepared statement.  “Now more than ever, we need to simplify advertising and further our marketplace capabilities for our customers. This is done through one holistic conversation that spans premium content and trusted environments, alongside proven and advanced ad capabilities.” 

Lesser left Xandr just as the unit seemed to be gaining new momentum. In March, the company struck a pact with AMC Networks, Walt Disney and WarnerMedia that had them taking part in a buying platform that allows advertisers to define narrower audience segments and reach them with TV programming. He was said to have been in contention to be CEO of WarnerMedia, and decided to leave when it became evident to him that he would not get the job. AT&T said in April that Jason Kilar, a founding executive of Hulu, would take over as WarnerMedia CEO.

Xandr still has an important role to play. AT&T said one of the tasks set before the joint ad-sales force was devising new commercial formats for the company’s soon-to-launch HBO Max streaming-video service. An ad-supported tier for the service is expected to launch in 2021.