Viacom Chief Looks to Ad Products to Revive Networks

Ad Sales Decreased 9% In The Second Quarter

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Viacom's advertising revenue continued on its tailspin in the second quarter. But despite lackluster ad sales, which the company attributes to weakness in traditional ratings, Viacom CEO Philippe Dauman remains upbeat about the company's ability to drive ad revenue moving into next year.

The company's domestic ad sales plunged 9% in the second quarter, below consensus estimates of a 5.5% decrease.

In an earnings call to Wall Street, Mr. Dauman touted the company's next-generation advertising capabilities as Viacom's answer to issues with TV measurement. Since many of Viacom's TV networks appeal to a younger demographic that's increasingly watching content on a delayed basis and on varying platforms, Mr. Dauman has argued that Nielsen measurement does not account for much of Viacom's viewing.

To combat this, Viacom has introduced several ad products that circumvent Nielsen measurement.

Mr. Dauman said since the company unveiled its Viacom Vantage data-targeting product in April, which allows Viacom to identify the programming assets that are most efficient in reaching a client's target consumer, it is already working with 10 "of the largest advertisers in the world, representing leading brands in a variety of sectors" including automotive, retail, telecom, financial services and consumer products. He added that Vantage is generating "significant incremental advertising revenue."

Mr. Dauman predicts Viacom's ad revenue will improve moving into next year.

These type of products were a meaningful part of Viacom's upfront pitch. During the upfront haggle -- when TV networks look to sell a chunk of their ad inventory for the new season -- Mr. Dauman said Viacom "did well and came in very close to the level of volume we had last year," despite the overall difficult nature of the upfront marketplace.

"We have a larger volume of signature original shows; we have more event shows; we are building more scripted series," he said. "These have a higher value and we are increasing accordingly on our ad revenues from significant advertisers who want to engage with those kinds of programs on our networks."

Mr. Dauman also noted that Viacom did "very well" in the kids upfront. Since Nickelodeon's ratings were challenged they had less inventory to sell. "Some endemic advertisers who thought they could get into the scatter market…found they could not…because we had a lot of scarcity," he said. "So some of these players came back to the upfront marketplace."

MTV's Video Music Awards, which will be hosted by Miley Cyrus on Aug. 30, is sold out of commercial time, Mr. Dauman said.

He also noted that Nickelodeon's "Kids Choice Sports" has become popular with advertisers and said he believes Trevor Noah taking over for Jon Stewart on Comedy Central's "The Daily Show," will allow it to attract a younger average audience.

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