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Advanced Ad Efforts Pay Off for Sling

A week after dish network’s top executive admitted that the profitability of the satellite TV company’s virtual pay TV platform isn’t nearly what he’d like it to be, Sling TV’s lead executive said there’s plenty to be optimistic about going forward in regard to advanced advertising.

“Sling is really seeing explosive growth with its advertising revenue,” Warren Schlichting, Dish Network executive VP and Sling TV group president, said in keynoting the Streaming Media West conference in Huntington Beach, Calif. “We’re seeing incredible results with targeted advertising.”

Cornered by B&C after his address, Schlichting conceded that this advertising performance isn’t yet broken out in Dish’s earnings reports. And it doesn’t appear robust enough, at least not yet, to be readily apparent in Sling’s average revenue per subscriber metrics, which the company concedes are still nowhere near that of a traditional satellite TV customer.

But the pay TV business in general — and the virtual multichannel video programming distributor space in particular — could use any green shoots it can find right now, with the top operators losing a collective 975,000 subscribers in the third quarter, according to Leichtman Research Group. The top two virtual multichannel video programming distributors, Sling TV and DirecTV Now, grew by only a combined 75,000 subscribers in the quarter, vs. 536,000 in the third quarter of 2017.

For Sling TV, not only did growth slow to 26,000 users in Q3, but, as Dish chairman Charlie Ergen lamented in the company’s third-quarter earnings call,“I think I’d like to make a little bit more money than we’re making today.”

Schlichting also conceded that “the margins on programming are practically nil” for Sling TV and other vMVPDs.

But to Schlichting’s thinking, that could change soon for Sling TV, which he said is ahead of the vMVPD field in terms of exploiting the platform’s audience of more than 2.3 million users. “DirecTV Now hasn’t quite launched with their [programmatic platform],” Schlichting said. “And YouTube TV is just dipping its toe in the water.”

Programmatic, he added, has the ability to expand TV’s ad revenue base, which has been stuck at an annual level of around $70 billion for the better part of a decade as digital platform ad sales will reach $107 billion.

Programmatic ad sales, which mimic the automated exchanges of the digital marketplace, have the potential to migrate spending back to TV by “exploding the value” proposition for advertisers, Schlichting said.

AT&T is also hopeful that advanced advertising can also render virtual pay TV platforms including DirecTV Now suddenly profitable. Chief financial officer John Stephens noting during AT&T’s Q3 call that it’s “just scratching the surface” in regard to programmatic technology.

Ergen noted: “At some point, somebody is going to get profitable and kind of lead the pack. And we think that Sling has a lot of advantages and some really, really great technology. We think we can be a long-term player there.”

Added Schlichting: “I know the idea of the pay TV industry growing again seems pretty radical.”