Viacom Is Trying Something New for Cable Upfront Season

As viewing habits change, the young-skewing cable outfit leans on social

When the head of a major cable conglomerate calls ratings falloff "an important secular issue," it may be time to look for solutions outside traditional channels, and that's exactly what Viacom's ad sales team is doing. That remark, by the way, was made by Viacom president and CEO Philippe Dauman on the company's Q1 earnings call last week, and it's an important observation. Viewing habits are changing, and gross rating points are getting less and less desirable as network content flows through multiple, unmeasured channels. That hurts ad dollars. "Inadequate measurement undermines innovation and disproportionately impacts … multiplatform experiences that viewers demand," Dauman told investors. "While it is currently a reality of our business, at Viacom we are not waiting for change."

At client-only presentations in New York last month, Viacom laid out its upfront season pitch to offer more to (and hopefully get more from) its advertiser base. The plan is a complex and daring one. Many networks will be pitching integrations and fancy metrics on those and other social platforms, but in a world of steadily decreasing attention to TV among young people, the precious remaining viewership in young-adult demos is dominated by the conglomerate that owns Comedy Central, MTV, VH1 and other brands aimed directly at this group of consumers.

The company has known for awhile that it can't rest on its laurels as TV consumption changes dramatically, so it's been using a two-pronged approach—Velocity, its in-house unit that uses data overlay software for clients trying to locate the most valuable ad placements on Viacom's air; and Echo, the company's social advertising platform, which now partners with Spredfast to measure not just users but quality—yes, a post on Facebook is superior to a like. "More isn't always more in terms of total reach," evp of integrated marketing Dario Spina said.

And in the programming itself, head of ad sales Jeff Lucas is focusing on the shows, not the pods.

"[We're selling] deep integrations, and they're going to be removable," said Lucas. "If a client has a sale—say Toyota has a new car—they can run an integration for the first 30 days and then pull it right out. We'll shoot secondary footage we can slot into the background instead. If it's CPG, they can leave it in forever, and it goes wherever the show goes—Hulu, Netflix, whatever."

That may sound small, but it's a large and key difference for advertisers with timing concerns—movies, new autos, retailers having a sale—who might not be interested in integrations otherwise. And Viacom is putting full-blown, show-length ads on its air, with specials on movies and video games sponsored by studios and software makers. A recent one, called Million Dollar Maze Runner and sponsored by Fox, featured contestants competing in a Maze Runner-themed MTV game show in an abandoned prison for a million dollars and a pair of cars. When it aired in September, it was a sizable success not just as advertising but also as programming.

Niels Schuurmans, evp of Velocity, remembers the experiment fondly. "The kid who was in second place wanted it so much!" he said. "He was just devastated. Finally I just pulled him aside and was like, 'You're getting $8,000.' It's a weird figure, but no one complained."

And make no mistake, advertisers desperately need Viacom and similar linear outlets, where an $8,000 splurge to make a contestant happy is the biggest headache. Social advertising? "It's the Wild West," sighed Julie Rieger, evp of media for 20th Century Fox, who ran point on Fox's complex (and wildly successful) multilevel campaign for The Maze Runner, the teen-targeted sci-fi thriller that became one of the most profitable films of the year when it pulled in some $341 million worldwide—more than 10 times its production budget.

Much of the splash the company made didn't come through traditional channels, either—Viacom is selling advertising on its high-traffic social media accounts and through its revenue-sharing agreements with Twitter and Tumblr. Traditionally, online media created by TV networks exists primarily to push Web users back to linear TV; Viacom is learning how to let it ride.

And that's good because multimillion-dollar enterprises don't have much of a sense of humor when it comes to professionalism, and the most powerful voices on social media that reach this audience segment are ungovernable, unprofessional and unstoppable—many of them teenagers themselves, who can speak directly to their peers via Vine and Snapchat and Tumblr. "I miss stage moms," Rieger confessed. "These kids, many of them are making six figures and some are making seven. We are so open to working this way, to accepting all of those things. But there's going to have to be some more accountability, or we'll just have to stop working with some people. My job is doing what's right for Fox and for our films."

And Viacom is one of the last bastions of old-fashioned, knowable business culture that also has some appeal to young consumers whose opinions are still forming—ratings, schmatings, you're always going to get more potential Maze Runner viewers on Teen Wolf than The Good Wife, and analysts at MoffettNathanson say that the company sources 14 percent of all television viewing, period. (The firm rates Viacom as a "buy" and has a target share price for it of $84, quite a ways from its $67 price at this writing.) Ad dollars were down 6 percent at the company last year, but they're up in the most recent quarter and projected up through the current quarter.

And there's no denying the power of the platforms, at least not for Rieger. "They had the right relationship with their audience," she said. "The fear when you enter into a relationship with a marketer is that it'll be a one-hit thing, and you need to enter into these relationships for three to four weeks. They were incredibly integral in the opening of the film."