While Viacom reported that its advertising revenues for the most recent quarter were down 7%, that was an improvement from 9% the prior quarter.
On the company’s earnings call with analysts, CEO Philippe Dauman said he expects the losses to continue to drop through 2016. “While it is still early in the quarter, we expect continuing improvement in domestic ad sales this quarter, which we expect to accelerate further as our fiscal year progresses,” Dauman said.
Analyst Vijay Jayant of Evercore ISI expects Viacom to cut its ad losses in half in fiscal 2016 with a 3.7% decline.
Viacom’s ad sales have been impacted by lower ratings caused in part by the move of younger viewers to digital platforms that aren’t included in traditional ratings.
Those young people are still consuming media. In fact recent research revealed that young people are spending more time consuming media each day than they do sleeping, Dauman said. “So apparently media executives aren’t the only ones losing sleep in this modern world."
Dauman said the improvement in advertising performance was in part due to improving ratings at six of its 10 biggest networks, and to the adoption of the company’s data-driven advertising products.
“Advertising revenue significantly outpaced traditional ratings as we continued to provide significant value-added offerings to our marketing partners,” Dauman said. One of those offerings is Viacom Echo, which helps clients take advantage of Viacom’s social-media footprint.
Another key component of Viacom’s next-generation advertising portfolio is Vantage, which Dauman called “our bet on sophisticated data that leverages our leadership in analytics and data aggregation for the benefit of marketing partners. It is a proven success and a platform that is in great demand among the largest and most sophisticated advertisers.”
Dauman said that there are 11 advertisers currently using Vantage. Those are major marketers in categories including automotive, beverages, consumer goods, financial service and quick serve restaurants.
“We are in discussions with dozens of additional Fortune 500 partners. Demand is strong and building. We anticipate that we will triple the total number of Vantage deals by next year’s upfront, representing a significant portion of our advertising revenue base,” he said.
Dauman noted that other media companies are building data programs “The market is moving rapidly in this direction, led by sophisticated national advertisers. This is good for the ecosystem and will create more demand. We are confident that Viacom will remain in the forefront as we continue to evolve and improve our proprietary product,” he said.
With signs of improvement in advertising sales, Viacom is moving to reduce the clutter at its networks.
“We’ve been focusing mostly on networks primetime, we’ve been looking at it network by network,” Dauman said. “We expect over time that as the viewing experience improves, that will improve ratings and we do believe there are some pricing opportunities, particularly when you marry it with our Viacom Velocity and Vantage products.”
Dauman also noted developments at Paramount’s TV division.
He said the company has three shows in production, with School of Rock on Nickelodeon, Grease Live on Fox and Vinyl on HBO.
“The division is also growing its original programming slate with a distinguished roster of creative partners,” he said, pointing to a straight to series order with Netflix for 13 Reasons Why, executive produced by Selena Gomez and an overall television deal with Emmy winner Cary Fukunaga.
To date, Paramount Television has 10 shows ordered to production and an additional 12 projects set up at networks and major digital outlets, he said.
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