Viacom Bets on Big Data to Boost Its Revenues

CEO Philippe Dauman is counting on innovations in audience measurement

Philippe Dauman Viacom Variety Cover Story

Before its troubles began, Viacom was long the place where top creative talent, from Jon Stewart to Johnny Knoxville, flourished across the conglomerate’s cable networks. Many of those famous faces have come and gone, but a very different breed of innovators has since taken up residence at the conglomerate. Their talent, however, is more science than art.

Over the past few years, a phalanx of data scientists from Microsoft and other technology havens have been lured to Viacom, where they are busily calculating ways to help marketers place their commercials with more precision. Once known as “Project Gemini,” a reference to one of NASA’s earliest human spaceflight programs, the service — now known as Vantage — will soon be offered to a broader array of the company’s sponsors. This combination of Silicon Valley wonk and Madison Avenue hard sell comes as rivals are crafting similar efforts.


“We are going to keep moving forward so we will always have the lead,” says Philippe Dauman, the company’s chief executive, holding forth in his office in Viacom’s New York headquarters. “They will be where we are today, whenever — a year from now, a year and a half from now. By that time, we’ll have gone even further.”

Viacom could certainly use a boost. Ratings at many of its top networks are suffering a prolonged slump that may well be a permanent decline. The company finds itself in the unenviable position of being the poster child for an industry grappling with the defection of younger viewers —Viacom’s specialty — from TV to new screens and subscription VOD outlets. In an effort to gird itself, the company wrapped a wrenching restructuring earlier this year that has resulted in a charge of $784 million, and prompted the exodus of many longtime executives. Its stock has tumbled as much as 50% in the past year, which spurred some critics to call for Dauman’s ouster, though it has rallied some in recent months.

Questions continue to linger over the health of the company’s controlling shareholder, Sumner Redstone, and what that might mean for the future of both Viacom and a sister Redstone holding, CBS Corp. Redstone has set up a trustee board that includes his daughter, Shari, and grandson, Tyler Korff, to supervise his holdings after his death. Still, among the rank and file, there is palpable concern the mogul’s demise could put Viacom in play.

The future of Viacom’s executive chairman is not something Dauman is very willing to address at length. “He is doing well” is all Dauman would say in response to a query about Redstone’s health, before steering the conversation back to Viacom’s operations.

But while the rest of the world is left to speculate on the end of the reign of the company’s 92-year-old founder, Dauman is focused on a different calculus: Algorithms intended to steer Viacom away from the traditional industry practice of spraying commercials across the TV schedule and hoping for the best. With networks like Nickelodeon and VH1 showing positive ratings momentum in recent weeks, Dauman believes the maneuvers will help Viacom wring additional money from a refreshed slate of original programming, while expanding its relationships with the world’s biggest advertisers.

And in a move that illustrates how competitive the market is for data-based advertising ideas, Viacom this week unveiled a partnership with TiVo that will give it access to information about the viewing behavior of that company’s subscribers.

“If you have a special advantage,” he says of the new ad product, “you ought to use it.”

Digital media allows advertisers to distribute ads with exactitude. Now as tech giants like Google and Facebook siphon ad dollars from TV, the industry has come under more pressure to do the same, as evidenced by the unprecedented emphasis at many of this year’s upfront presentations on content companies’ data capabilities.

Viacom has added staffers to collect various streams of information — set-top box viewership, mobile-location information, consumer-purchase patterns and more — and then interpret them to help clients optimize their advertising buys. Seeking a first-time car buyer? Maybe the most likely prospects will turn up in late night on MTV, say, or on a wee-hours showing of “World’s Wildest Police Videos” on Spike. Expectant mothers? Perhaps the data will point to a program on TV Land, or a parent-and-kid co-viewing favorite on Nickelodeon.

BIG PLANS: Viacom data chief Kern Schireson and head of sales Jeff Lucas use technology to increase the value of ad buys.

In recent years Viacom has also built teams that tailor ads and content to specific audiences, and prompt viewers to use social media to pass it along. For instance, Viacom created a commercial for Samsung starring ASAP Rocky to air during MTV’s biggest annual event, the “Video Music Awards,” and placed in a way that would lead into a performance by the rapper himself. The consumer-electronics giant purchased a whopping eight spots as well as the right to be the exclusive smartphone sponsor of the evening, blocking out ads for Apple’s iPhone.

“You make sure you are going to be more effective, putting a commercial in the right position to maximize value,” Dauman explains. “That’s added value you can charge (for).”

Added value is just what the company needs: Viacom domestic ad sales have slid for four consecutive quarters, with the most recent third-quarter tally down 9%. The company has already warned Wall Street that a fifth drop is coming when fourth-quarter results are announced next week, and credited Vantage for staving off an even steeper decline.

Viacom has also had a little fun with its measurement savvy; the company created a satirical music video for promotional purposes in which digital stars the Fat Jewish and Todrick Hall tout big data with hip-hop-flavored braggodocio.

Viacom moves into data-driven precision at a time when advertisers are more open than ever to considering new yardsticks for measuring the performance of programming. For decades, their benchmark has been Nielsen, which tells TV networks and advertisers how many people watch programs and commercial breaks, and offers a breakdown by age, gender and race.

But as the media landscape splinters around dozens of new ways to watch video, many are calling for ways other than quantifying raw mass to gauge consumer response. The result: a hodgepodge of new measurement ideas, including a looming merger between two media-monitoring companies, ComScore and Rentrak, that could measure both digital and TV activity.

“I see the future in real personalization of messaging, and if we can see that on TV, that’s going to be a huge benefit for us.”
Emily Silver, PepsiCo

Like other TV companies, Viacom’s Nielsen strength has ebbed over the years. Chalk that up to the kids who watch MTV’s “Catfish,” Comedy Central’s “Broad City” and Nickelodeon’s “Bella and the Bulldogs” in new ways that Nielsen does not tally at present. Desperate times call for desperate measures: Viacom networks have been caught “stuffing” ad breaks with extra commercials so they can meet the guarantees of viewer impressions made to advertisers.

Dauman recently told investors the company would run fewer TV commercials in primetime — recognition, perhaps, that the practice has overstepped its bounds. Meanwhile, the exec has vowed to raise the percentage of Viacom ad sales not based on Nielsen ratings to 50% over three years, up from around 30%.

Nielsen is improving, Dauman says. Indeed, the company intends to launch a “total measurement” service that will count viewers across all kinds of screens by the end of this year. But Viacom didn’t want to wait for that, Dauman says. “I wanted to get a complement to the antiquated forms of measurement that have existed in the past.”

The data recipe Viacom cooks points advertisers to where they can find the biggest audience eager to hear their particular pitch. Notes Dauman, “We are willing to live and die by the fact that our fans are really engaged.”


You’d think the executive overseeing Viacom’s data innovations would operate from a place of chaos. But Kern Schireson holds forth in an office that looks as if he moved in yesterday. No errant papers. Few tchotchkes. A wooden table serves as his desk. Perhaps it’s a fitting sanctuary for someone who studied philosophy and logic in college and graduate school. “I need it to be calm,” the company’s executive vice president of data strategy and consumer intelligence says during a recent meeting.

This 42-year-old son of Zen Buddhist priests maintains his composure while overseeing the organization of reams of data from such entities as Rentrak, which measures set-top box activity, or TRA, a unit of TiVo that matches audience viewing habits with consumer-purchase information. Schireson’s team also taps into browser data that examines consumers’ online shopping habits and YouGov surveys of consumer attitudes.

“We are willing to live and die by the fact that our fans are really engaged.”
Philippe Dauman, Viacom


It’s a heady brew of information, all distilled to help specific sponsors of Nickelodeon, BET and other Viacom outlets precisely target the audience most likely to want to see it. “What happens when you put the right ad in the right context in front of the right person at the right time?” he posits.

Viacom has begun to do deals with certain advertisers based on its professed ability to deliver very specific audience segments, like people in the market for a mobile device. The idea is to use the data to devise a prediction of where the most people in a “true target” will be, and Schireson says Viacom can do that down to a specific program or even a particular commercial break in that show. “This year, we will literally guarantee on the delivery of that ‘true target,’ ” he says.

Media-buying executives like the fact that Viacom can help optimize the placement of commercials as close as two weeks before the ads are set to appear. Other media companies, they say, tend to work on a monthly or quarterly basis.

Not everyone has access to such wizardry. The technology is available only to those advertisers who spend a certain amount with Viacom, and guarantee to increase spending over a set period of time, says Jeff Lucas, the company’s head of sales. After starting with three sponsors on the project, Viacom now works with 11, says Dauman, who expects to triple that number by the time of 2016’s upfront market.

Viacom has quietly been working with a handful of large sponsors in an effort to test its technology. Procter & Gamble, General Motors and PepsiCo are among the clients on board, according to people familiar with the situation. Viacom executives decline to name specific advertisers. Procter and GM decline to make executives available for comment.

THAT’LL BE THE DATA: Digital star Fat Jewish touts big data, top; left and right, a Viacom created ad for Samsung in MTV’s “Video Music Awards” linked the show to a performance by rapper ASAP Rocky.

After testing Viacom’s data technology with Mtn Dew in 2013, Pepsi intends to make fuller use of it next year, says Emily Silver, senior director of media and digital for PepsiCo. Americas Beverages. The goal, she explains, is to find the Viacom programs and networks that draw audiences most interested in beverages like Sierra Mist, and learn how to apply Viacom’s ad optimization to other platforms. “It’s really important to make sure the impressions we buy across the board are getting to the right people,” she says. “I see the future in real personalization of messaging, and if we can see that on TV, that’s going to be a huge benefit for us.”

As the media industry transforms from a world ruled by Mad Men to one governed by mathematicians, Viacom is launching a salvo in a looming Data War among big media companies. Time Warner’s Turner and Comcast’s NBCUniversal have moved aggressively into this market, with the former offering to use an advertiser’s own data to achieve certain defined goals, and the latter making available set-top box data from its corporate owner, the largest U.S. cable distributor, along with other streams from assets like its theme parks or online-ticketing site Fandango. CBS, Discovery Communications and others are discussing the subject as well.

“I do think companies will be at a disadvantage for at least part of the ad budget if they do not play in this space,” says Dan Aversano, Turner’s senior vice president of client and consumer insights.

Interest in the science is high. After spending decades living with the famous John Wanamaker adage “half the money I spend on advertising is wasted; the trouble is, I don’t know which half,” marketers realize the numbers game helps them, sometimes in unexpected ways. “I can have two shows priced the same, but one works (better) based on the audience my client wants,” says John Swift, chief executive of investment for North America for Omnicom Media Group. “I can find hidden gems, really hot things, find the unrevealed value in the middle of the pack, in the unheralded shows nobody wants and in the really good shows everybody wants.”

By the Numbers
Net earnings attributable to Viacom
$13.78b Total 2014 Revenue
$10.17b 2014 Revenue: TV Nets
$3.73b 2014 Revenue: Film
$2.39b Total 2014 Profit

Big Media is ramping up use of the new technology because sponsors are doing the same. The threat that sponsors will bring “programmatic” advertising — ads bought and distributed according to a predefined set of data — to TV from the Web has grown more tangible. That technology lets them load in parameters, press a button and scoop up ad space, all for an efficient price. “Programmatic is synonymous with cheap,” says Viacom’s Lucas. “We don’t want to devalue our premium product by going cheap.”

The TV networks also face increasing competition from digital rivals, says Linda Yaccarino, NBCUniversal’s chair of advertising sales and client partnerships. “Technology is moving with such ferocious velocity, the gap between consumer behavior and measurement has never been greater,” she notes. More than half her job at present, she says, is spent devising ways to set deals with advertisers that involve data products.

Data can be helpful in other instances, too. Chris McCarthy, general manager of Viacom’s Logo and VH1, likes to consider “affinity mapping” when trying to think of programs he might serve audiences. While supervising MTV2, he and executives realized through monitoring social chatter around programs that there was still a desire for the old MTV program “Celebrity Deathmatch.” A new version for MTV2 is in development for 2016.

Talk of algorithms and numerical formulae might make some eyes roll, but Dauman thinks offering a way to track the melange of consumer habits can have a direct effect on the company’s creative ventures: New revenue can be plowed back into content production. It doesn’t take a scientist to connect those dots. “The one word I’ve used a lot with our people in all areas is ‘accelerate,’ ” Dauman says of the new model. “We need to move faster.”