When Jon Steinlauf steps on stage next week at The Theater at Madison Square Garden for Warner Bros. Discovery’s first upfront as a newly combined company, it will be the first look advertisers will get at how the media giant will compete in the increasingly competitive streaming landscape. 

Steinlauf is now tasked with leading the company’s advertising strategy at a time when the stakes are higher than ever for TV players, who are still navigating a dwindling linear landscape while building for a streaming future. With streamers under increased pressure to generate revenue and drive subscriber growth, Warner Bros. Discovery’s success hinges in no small part on a successful ad model. 

This isn’t the first time Steinlauf, Discovery's chief U.S. advertising sales officer, has found himself reshaping the ad structure of a newly formed company. The veteran ad executive helped merge the ad efforts of Scripps Networks, home of Food Network and HGTV, among others, with Discovery in 2018, where he held the role of chief U.S. advertising sales officer. 

Now, his arsenal includes the premium original programming of HBO Max, plus sports content on networks such as TNT and TBS, along with the food, home, science, animal and other unscripted content he's sold for years. The marketing world will be closely watching the company as it builds its new super-stuffed streaming product.

Part of Steinlauf's strategy heading into Warner Bros. Discovery’s upfront, he tells Ad Age, is presenting separate offerings for Discovery+ and HBO Max, which he says will be most effective for the company’s strategy as well as for the ad marketplace. Speaking ahead of Warner Bros. Discovery's May 18 upfront, Steinlauf touted the brand value of long-tail cable networks, weighed in on alternative currency and measurement tools, and laid out the single most important thing he’s thinking about heading into this year’s upfronts.

What is your focus in this new role going into upfronts this year?

The single most important part is sports: Turner Sports, Warner Bros. Discovery Sports now. What we now have in sports is truly incredible, and long-term. 

We're so excited to have March Madness and the NBA, and now we're in our first year with the NHL. We're sharing that with Disney and ESPN and ABC. But in June of 2023—which we're selling in this upfront cycle—for the first time in history, the entire final series of one of the four major professional sports will be played on a quote-unquote cable network. We're starting to think about losing the label of cable networks and broadcast networks because they've created, I think, an unfair valuation in the marketplace. 

And then there is the Major League Baseball contract, which is also in the first [year of a seven-year deal]. We share that for the most part with Fox. We go all the way through to the League Championship Series, to great primetime inventory through the month of October all the way through the playoffs.

We're looking at a more crowded ad-supported video space than at any other time in streaming history, with some of the biggest players like Disney+ and Netflix planning to enter the market. How do you plan to stay competitive as a streaming property and differentiate yourself as these bigger players introduce lower-priced tiers for premium products?

We think of this as being these complementary services. Younger than linear, let's start there, more diverse than linear, and very importantly, low commercial loads. The thing that advertisers look at closely when it comes to streaming service advertising is engagement, and low commercial loads is a big part of positive engagement. We look at it as the quality of the content, the ability to get advertiser engagement, the demographics being younger and more diverse, and then there's the idea of reaching households.

There's a real battle going on amongst the advertisers to gain access to the 40 million homes in America that have opted out of cable. Because in many cases, the heads of the household are under 40. So there's a battle going on to try to penetrate those non-cable households to get new viewers, to extend reach and to get younger viewers. We like our hand having this duo of sister services between HBO Max and Discovery+.

How are you thinking about alternative currencies and measurement?

We've been testing three currency companies that are emerging: VideoAmp, iSpot and Comscore. But we're still very much a Nielsen client. It's still very much a Nielsen currency marketplace. However, we're testing to see how stable, how accurate, how scalable, are these platforms. Nielsen may have had control over this market from the beginning of TV, but this may be a point in time where there could be some alternatives. I think it's incumbent upon us to test those alternatives. What we really want at the end of the day, is we want the most stable, accurate measurement of our audience as possible. 

Read: Nielsen plays defense as rivals press new measurement guarantees at NewFronts

You briefly touched on cable, and I’m wondering about the value of long-tail cable networks, for example, Science, to advertisers? How are you thinking about ad sales for those channels?

Many of the major streaming services are owned by companies that also own major TV  networks, so there is an interdependency in the negotiation between Hulu and ABC, or Peacock and NBC, or HBO and Discovery. There's a negotiation going on for linear TV, there's a negotiation going on for what I would call non-linear TV. And it's not just streaming, but, in our case, it's Bleacher Report and CNN.com, it's video on demand, it's authenticated apps. 

We have a lot of specialized brands, verticals, that are important to advertisers. They may not have 3 million people watching them at night, they may only have 200,000 or 300,000 people watching them, but they contribute to reach, they contribute to sponsorship platforms. It helps to have all of these great brands because advertisers prefer brands to just commoditized inventory. And a good example of a great new brand in our portfolio is Magnolia.

Typically, we in ad sales say "invest where there either is a good brand, or where we can build a good brand." Because I think brands are hard to build in media, especially in TV these days. So when you have a good brand, it's worth trying to find growth wherever you can find it.

How is Warner Bros. Discovery thinking about its ad strategy for a future unified mega-service? There are so many different flavors of brands, with unscripted brands that have huge followings, alongside premium scripted stuff like “Euphoria.” From an ad sales perspective, how do you think about selling those properties under a single platform?

A really, really good question that we're thinking about now in the ad sales upfront, is it one brand or two? In the consumer world, other members of our leadership team will decide how to best market the combinations to consumers and how to bundle them and price them, and then what's ad-free? What's ad-light? But speaking specifically about ad sales for the ’22-’23 upfront, we believe going out there with a separate offer for Discovery+ and a separate offer for HBO Max will serve our purposes and the marketplace’s purpose better.

If you're an advertising executive and you follow our company, where we have been positioned is as the leaders in lifestyle: HGTV, Food Network, Animal Planet, Oprah, Magnolia, Cooking Channel, TLC, Discovery Channel, MotorTrend. So all of these are pretty clean verticals without a lot of natural predators. The endemic advertisers in those categories will gravitate more of their spending towards Discovery+. We don't sell brand-specific Discovery+, for the most part. We're mostly selling an audience segment, and a lot of it is being done through addressability and programmatic tools.

HBO Max is really built around scripted drama, and some comedy, like the Lakers series or "Succession." Now, not every one of these shows is available with ads—we're still working through what has ads and what doesn't have ads. That will sort itself out. But I believe that the advertisers who want to be on HBO Max may be different than the advertisers who want to be on Discovery+. Some will want both, but some will only want one or the other.

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You've been through mergers before. How might your approach to advertising be similar or different this time around?

Having been through one of these four years ago is helping me because I remember—I'm having a lot of flashbacks. Having been home for two years with the pandemic, and then to come back, it feels like it's still all one merger [laughs]. 

The part of it that I think is most exciting is going into a conference room, having four people in the room from each company, and let's just riff. Let's just talk about ideas. How do we get better at what we do? We always want to be better, we will always want to reach our potential. And what you find when you have four smart people that are legacy Warner, and four smart people who are legacy Discovery—we've competed fiercely against each other for most of our careers—now we're sitting in a room together on the same team. What are your secret formulas? How do you do this? How do we do that? No one's better at everything. It's sharing best practices and finding ways to learn from each other. 

The second thing is that the knowledge you gain when you merge with a major competitor—now for me, this is the second time in four years—you learn so much more about the market, what advertisers are doing, pricing, packaging, mixes, just strategy. You become so much smarter. I've had two chances to see a major competitor's entire game plan.

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