Viacom: Transforming Television with Targeted Ads

Can programmatic ads combine the reach of television with the targeting of digital to change the face of TV Advertising?

Programmatic Advertising: TV Audiences Meet Digital Targeting

In the TV Advertising space, Nielsen ratings have long reigned supreme.  Advertisers pay for viewers in certain demos who often represent only part of the total audience, leading to inefficiency and waste.  However, the rise of the Internet has produced a new way to reach consumers.  Digital advertising’s personalized and targeted approach has many advantages, yet television remains the preferred medium for many advertisers due to its broad reach and demonstrated ability to monetize audiences.1

As live TV ratings erode due to time-shifted viewing and online streaming,  Viacom is embracing new trends in advertising in order to better monetize viewers.  One example is the growing megatrend of programmatic advertising: data-driven TV buying that unites the reach of television with the targeting of digital and uses software instead of people to optimize ad buying. 1  By collecting cross-platform data on consumers’ television viewing, internet searches, and other relevant information, programmatic advertising enables buyers to target precise audiences with personalized ads. 1  For example, Viacom is able to identify and reach 18 – 35-year-old females interested in purchasing a car who make at least $150,000 annually and serve them targeted TV ads. 2  Combining television’s large audiences with detailed viewer data results in a highly personalized experience that delivers accuracy and efficiency for advertisers’ favorite medium. 1

Viacom’s Short Term and Medium Term Initiatives

Today, a majority of Viacom’s advertising is still via traditional methods.  Nevertheless, Viacom’s management has taken several steps to increase its use of programmatic advertising in both the short and medium terms.  Management’s overall goal is to better monetize viewers of Viacom content across all platforms and to increase the value of the entire TV ecosystem.

In the short term:

  • Freewheel Partnership: Viacom and Comcast’s Freewheel announced a deal to partner together on advanced advertising and data in April 2018. 3 The partnership combines Viacom’s deep knowledge and strong connections with both advertisers and audiences with Freewheel’s sophisticated advertising technology to create a platform that allows marketers to reach consumers in a more efficient, accurate manner. 3

In the medium term:

  • Viacom Vantage: In 2015, the company launched Viacom Vantage—a data-driven product that enables marketers to reach custom segments. 4 In using cross-platform data to understand how specific customers watch content, Vantage predicts which shows on MTV, Nickelodeon, etc. will capture the most value for clients. 5  Vantage also provides operational and inventory management so that each client receives a customized media plan tailored to its advertising needs. 5  In August 2018, the company licensed its Vantage product to 21st Century Fox in its growing effort to transform the entire television advertising industry. 6
  • Open A.P.: Finally, in 2017, Viacom, Fox and Turner Broadcasting formed a partnership and created a new platform called Open A.P. 7  Open A.P. provides advertisers with standard sets of data when targeting specific customer segments such as frequent moviegoers or pregnant women. 7  ComScore’s set-top box data and Nielsen ratings information from all three companies are combined on the platform to create the data sets. 7  Advertisers can then reach consumers by buying cross-platform media plans through any of the participating companies.  Open A.P. is attempting to standardize data sets across the TV industry and create a new advertising currency. 7

Additional Recommendations

While management has made recent strides, programmatic advertising still represents only 3% of the total TV ad market. 2  To stay ahead of the curve on this growing trend, Viacom needs to double down and aggressively expand its programmatic advertising sales and capabilities.

In the short term, Viacom should explore partnership opportunities in the connected TV market.  Connected or “Smart” TVs capture a lot of consumer viewing data not only from set top boxes, but also from apps and websites visited by any device connected to the same WiFi network. 8  Viacom should talk to market leaders such as Samsung or VIZIO about partnering to use this technology to serve its entrenched advertiser and consumer base.  If Viacom was the first traditional media company to play in this space, it could develop a first mover advantage.

In the medium term, the company should set the goal of reaching 20% of all ads sold being done so through programmatic advertising by 2022.  Tactically, management should drive this increase by selling more of its prime-time ad slots through data-driven advertising instead of the traditional method.  Unless you seek to disrupt yourself, it is likely that someone else will use innovation to disrupt you.

Important Questions

  1. How can Viacom continue to increase its reliance on programmatic advertising when it requires buy-in from advertisers, many of whom still prefer Nielsen ratings?
  2. In the future, will there still be a market for broad advertising campaigns aimed at all adults, such as Super Bowl Ads? Or will television advertising become entirely personalized and targeted?

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Sources Used

  1. David Abecassis, Yuliya Guitard and Dr. Michael Kende, “Convergence of TV and Digital Platforms: Increased Innovation and Competition for Advertisers’ Budgets,” Analysys Mason, December 21, 2017, via Business Insider Intelligence, accessed November 2018.
  2. MediaPost, “Programmatic TV Future Coming Into Focus Slowly, But Surely,” May 7, 2018, via Factiva, accessed November 2018.
  3. FreeWheel, “Viacom and Comcast Announce Advanced Advertising Partnership,” April 23, 2018, http://freewheel.tv/viacom-and-comcast-announce-advanced-advertising-partnership/, accessed November 2018.
  4. Business Insider, “What You Need to Know in Advertising Today,” August 10, 2018, via Factiva, accessed November 2018.
  5. Viacom, “Viacom Unveils ‘Viacom Vantage,’” April 29, 2015, https://news.viacom.com/press-release/ad-sales/viacom-unveils-viacom-vantage, accessed November 2018.
  6. Viacom, Q3 2018 Earnings Call Transcript, via ABI/ProQuest, accessed November 2018.
  7. Brian Steinberg, “Turner, Viacom and Fox Debut ‘Open A.P.’ Ad-Targeting Plan to Broader View,” Variety, April 7, 2017, https://variety.com/2017/tv/news/turner-viacom-fox-open-ap-advertising-digital-targeting-1202026262/, accessed November 2018.
  8. Alan Wolk, “Why ACR Data is Poised to Become the Future of TV Measurement,” Forbes, February 19, 2018, https://www.forbes.com/sites/alanwolk/2018/02/19/why-acr-data-is-poised-to-become-the-future-of-tv-measurement/#501d9f011821, accessed November 2018.

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4 thoughts on “Viacom: Transforming Television with Targeted Ads

  1. Advertising is an immensely profitable business and I appreciate the insights you wrote about in your article about new ways to approach ads. While I agree that advertisements will continue to become more personalized and targeted, I do believe that the market for broad advertising campaigns will continue to exist.
    I see two reasons for such campaigns: products/services that haven’t figure out what their target market exactly is, and to reach consumers that aggressively protect their privacy with tools that prevent developing ad profiles for them. For example, I think products such as a breakfast cereal would fit into the first category. Until the company figures out exactly who it appeals to, they would want to use a broad marketing strategy. The second category’s draw towards broad advertising campaign would depend on the size of population.

  2. Super interesting info on Viacom and targeted ads!

    To your first question, I think it’s important to note that it’s not only buy-in from advertisers that’s necessary, but all parties along the value chain for live TV in order to deliver a consistent experience to consumers – cable distributors, set-top-box manufacturers, and device makers as you had mentioned all need to be aligned to even get programmatic ads in front of consumers.

    To your second question, I definitely think broad based advertising campaigns will remain important – as we saw in the Dove case this week, one of the more powerful things marketers can do to build a brand is to create a wide reaching conversation and try to enter the social zeitgeist. I’d worry that if all advertising moved to programmatic and hyper-targeted, brands might actually miss out on those opportunities to transcend their product, but absolutely see the industry moving this direction.

  3. Thank you very much for the article, I really enjoyed it. While reading it, I kept thinking about the potential that this kind of advertising could have if it was integrated with the clients systems. For example, if a company selling a certain product would be able to link who of its clients watched a certain ad before making a purchase, that would allow it to measure its conversion rates and precisely calculate its client acquisition cost. Then if that information was shared with the media company and applies to its ads algorithms, it could enable a feedback system that using machine learning algorithms, could optimize conversion rate by testing different targets. This could even allow the media company to charge clients as a percentage of sales generated and there would be a perfect alignment between client and Viacom.

    Thanks again for the article.

  4. Marketing was early to the idea of using data to improve business, and so it seems strange that this particular slice of the industry has resisted improvement to the limited Nielsen metric when the digital targeting revolution has demonstrated that there are more powerful alternatives. Though I imagine Nielsen ratings will either evolve or be replaced with better metrics, I expect there to remain a strong market for broad-audience advertising, because the broadest and most mature brands will continue to seek to serve everyone–and therefore seek the broadest audiences.

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