Upfront 2015: Viacom Expects Slight Gain in Volume

Philippe Dauman Viacom Earnings
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Viacom, which has suffered from ratings declines at its major cable networks in recent years, expects to notch a greater volume of advance advertising commitments as part of its annual upfront negotiations – but the reasons behind the slight uptick may have only a little to do with traditional TV.

The New York owner of MTV, Nickelodeon and Comedy Central projects volume of advance ad commitments to be up between 3% and 4%, according to people familiar with the situation. These people say Viacom has won some advertisers over by offering to devise digital and social-media extensions for their TV campaigns.

Indeed, finding new terms for ad deals that do not involve a total reliance on Nielsen ratings has become a mandate at the company under CEO Philippe Dauman, who has vowed to raise the percentage of Viacom ad sales not based on Nielsen ratings to 50% over three years, up from what Viacom has said is 30%.

Approximately 85% of deals done with Viacom during the current upfront have included TV, digital and social, these people said.

The disclosure suggests that media buyers are making upfront progress with cable networks, after wrapping some activity with broadcast outlets in this annual marketplace for TV advertising.

In recent months Viacom has unveiled new initiatives that tie advertising to things like social-media impressions and consumer interactions with promotions.  The company has offered to align advertisers with social-media influencers and to create content that is tailored to specific pieces of programming on its networks. Earlier this year, the company unveiled an effort that would let sponsors use various kinds of consumer data to help them determine which of its networks would offer the most effective perch for different commercials.

Viacom pressed for increases of between 3% and 4% in the rate of reaching 1,000 people, a measure that is known as a CPM and is instrumental in these talks. One media-buying executive with knowledge of upfront talks suggested the rate of change may have been closer to 3% at some of Viacom’s networks.

Whether the numbers augur more revenue for Viacom in months to come remains to be seen.  Ad commitments agreed to in the upfront are just that – commitments, not cash. Advertisers have the ability to cut back on their agreements at various points during the programming year.

Viacom reported $13.78 billion in revenue for its fiscal 2014, more or less flat with the prior year. The company notched a 2% gain in ad revenue from its TV networks, largely bolstered by higher ad sales at its international outlets.

This year’s upfront has been tough for the TV industry.  Earlier this week, a person familiar with Fox Broadcasting acknowledged the network secured 3% to 5% less volume of advance ad commitments than it had in 2014. Ad buyers believe CBS, which said in a statement it had completed the bulk of its upfront sales, also secured less volume this year.

“Volume isn’t up anywhere except the CW, which is a smaller revenue network,” said the media-buying executive, who was skeptical about Viacom’s ability to increase its advertising commitments. “The victory in this marketplace is sellers minimizing their volume declines and stealing share.”

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