Viacom and Fox look to stimulate TV ad targeting with a new licensing deal

August 9, 2018 9:46 pm

Viacom CEO Bob Bakish. Viacom CEO Bob Bakish. Credit: Chris Ratcliffe/Bloomberg

The cable-network giant Viacom has inked a deal to license its proprietary data-fueled ad product, Viacom Vantage, to Fox.

Speaking to investors during the company’s third-quarter earnings call on Thursday, Viacom president and CEO Bob Bakish said Fox will use Vantage to help advertisers more precisely target viewers across its networks.

“This is a powerful validation of our leadership in the space, and as we work to secure additional licensing partnerships with publishers, we’re excited about the potential of this new business to accelerate the ecosystem and evolve into an incremental revenue stream,” Bakish said.

Viacom believes that licensing its Vantage ad-targeting technology, which is designed to identify programming where marketers’ target consumers can be found, will go a long way toward hastening the adoption of advanced TV advertising. That would in turn help traditional TV networks compete on more level footing with the likes of Facebook and Google">Google. Talks with other networks and publishers are ongoing.

Viacom chief financial officer Wade Davis went on to clarify some of the particulars of the deal. “The important thing to note is that we’re not actually licensing data—this is a technology license,” Davis said. “So we’re licensing our Vantage targeting engine, which is software, and then there is a set of managed services agreements.”

Along with the potential to help speed up the implementation of data-driven TV advertising, the Vantage licensing scheme is expected to serve as a tidy new revenue stream for Viacom’s Advanced Marketing Services division. According to Bakish, revenue at the data unit—which includes branded content, advanced advertising and experiential offerings—soared 33 percent in the quarter, and is on pace to rake in some $300 million over the course of the calendar year.

Vantage isn’t the only data-powered ad product in circulation; NBC Universal, Discovery and AT&T’s newly-acquired Turner all boast their own in-house divisions designed to help advertisers make smarter ad buys by way of precision audience targeting. But for Discovery, the aforementioned network groups also have joined forces on the OpenAP consortium.

MTV revival

Viacom once again faced headwinds in the quarter, as domestic advertising revenue fell 3 percent to $922 million. In a note to clients Thursday, MoffettNathanson analyst Michael Nathanson said Viacom’s domestic ad sales have been “negative in six of the past seven years.”

Much of Viacom’s ad woes are a function of a long stretch of under-deliveries at its top networks. Per Nielsen C3 data, total-day ratings for Nickelodeon‘s target demo (kids 2 to 11) were down 26 percent compared to the year-ago quarter, while the revamped Paramount Network, formerly known as Spike TV, was down 22 percent in the 18-to-49 demo. In the aggregate, Viacom’s total-day C3 ratings were down 7 percent across the portfolio in the target demos, while prime-time C3 deliveries among the 18-to-49 set were down 5 percent year-over-year.

On the positive side of the ledger, MTV is showing a much-needed resurgence with significant gains in the 18-to-34 demo, while BET‘s targeted deliveries were up 18 percent in C3, a metric that approximates audiences for commercials over three days of viewing. MTV was given a boost by unscripted series like “Jersey Shore: Family Vacation” and “Floribama Shore,” while BET has been putting up solid numbers with a blend of scripted fare and docu-series.

The significance of MTV’s revival isn’t lost on Bakish, who noted that “18 months ago, MTV was deemed by many, to be a network in decline and at risk of becoming culturally irrelevant. Well, times have changed.”

Fewer commercials

According to MoffettNathanson analysis, Viacom was one of just two cable network groups to have slimmed down its ad load during the quarter. That said, Viacom still has the most onerous commercial-to-programming ratio on TV. Total-day commercial minutes per hour for all Viacom nets averaged out to 14.2 minutes out of every 60, and while that marked a 2 percent decline compared to the year-ago 14.5 minutes, it is still represents quite a high concentration of spots when compared to Disney (10.1 minutes), Fox (10.7), Discovery (11.4), NBC Universal (11.9) and Turner (12.2).

Domestic affiliate revenue fell 3 percent on the quarter to $978 million. Bakish said Viacom anticipates a return to growth on the carriage fees front beginning this quarter.

“We think there’s a clear and demonstrable fact that this company is making material progress in a whole set of areas,” Bakish said toward the end of the call before electing to punt on a question about the much-discussed reunion of Viacom and CBS. “We’re not going to comment on any specific M&A related to Viacom. We’re focused on operating the company and continuing to move the ball down the field.”

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