Viacom Networks Still Play Off of Big Value

Sales chief Lucas says new apps will help reach millennial viewers

After all the upfront presentations are done and cable ad
sales executives start calculating how much of a price increase the market will
bear, their thoughts will eventually turn to Jeff Lucas, head of sales for
Viacom's music and entertainment networks.

Ever since he cut ad prices for USA Network when he headed
sales for Universal back in 2001, Lucas has had a reputation among his
colleagues as a guy who sacrificed CPM growth for volume.

Now, Viacom is coming off a rough 2012, with a plunging
Nickelodeon causing the bulk of the damage. But according to figures from SNL
Kagan, ad revenue was down at MTV, Comedy Central, Spike and CMT as well, so
there may be more pressure on Lucas than usual.

Lucas says he's not concerned with what his competitors think
or how his actions affect the market. "I can't look at what other people say or
do," he says. "We do what's best for Viacom."

While ratings fluctuate, Lucas says Viacom's brands are the
strongest in television and are in demand among advertisers. According to
Kagan, MTV's ad rates are second only to ESPN among cable networks.

"We have very healthy CPMs across our brands, and that is
only because people are willing to pay us what they think the value is," says
Lucas, who is known for getting close to clients and understanding what media
agencies need to get deals done.

"We're offering them new ideas, further association with our
content," Lucas adds. "New content that's coming out, some of which will be
unveiled in the upfront presentation for MTV," to be held April 25 in New York.

MTV has, for many years, made early deals and is usually
among the first cable programmers done with its upfront. "Our advertisers
demand we do deals earlier because they want the value and they know there's
only so much," Lucas says.

Apps to Help the Cause

Viacom attracts the millennial viewers marketers covet. "We
do more research, we know our audience better than anyone," and that knowledge
benefits clients, according to Lucas.

And since millennials are mobile, Viacom is finally
unveiling a series of apps to make it easier for viewers and marketers to
follow its content. Lucas says MTV's app will come out June 1, followed by the
VH1 app a month later and Comedy Central's due over the summer.

Viacom sells more than spots to its advertisers, making its
revenue a bit tricky to measure. It finds customized ways to have consumers
associate sponsors with content.

"That's why we've beefed up our integrated marketing group
to just about 200 people, because we have to build that association, we have to
create that value from the association with our audience and with our content,"
Lucas says.

"And because we spend so much money building the content
based on research and because we own most of our content, we can then create
additional content for clients in the voice of the content creators on each
platform," he adds. "That means much more authenticity, which is what clients
are looking for. They're looking for that authentic voice at reaching their
customer because then it's going to have more impact, there's going to be more
attention, and there's going to be more possibility of a sale."

For Lucas, creating value for clients by helping them move
product off the shelf is job one. "By delivering value to our clients, we can
deliver value to Viacom," he says. "Our ad sales numbers are very good, and
that's because we deliver value for the customer. Customers keep coming back.
Why? Because we're always looking toward that next sale and trying to

Some of those deals get completed during the upfront, but
they are often the result of staying current with a client's business needs 52
weeks a year, says Lucas.

Sometimes, deals involve more than one network. Lucas says
some advertisers like to find a single place to do some wide-ranging business.

One example Lucas likes to point to is a promotion MTV did
for Universal Pictures' musical comedy Pitch Perfect tied to last year's
Video Music Awards. Viacom's in-house unit created a spot featuring the cast of
the movie doing a "lipdub" to Nicki Minaj's song "Starships."

"It's all about the value you bring in multiple brands,"
Lucas says. It works "if we can fulfill the need and do it across multiple
brands, not just because we have it under one roof. It's a partnership. We call
it Viacom's partnership model. And it works."

The Pitch Perfect spots
aired on MTV leading up to the VMAs,
where one of the movie's stars, Rebel Wilson presented an award. The ad was
also put on a page full of Pitch Perfect
content and promoted by MTV's Twitter account. It has been seen 2.3 million
times online.

Wilson also hosted the recent MTV Movie Awards. When it was announced that the film's cast would
reunite for a special performance during the show, MTV reposted the spot. Last
week, plans for a sequel were announced.

Lucas says Viacom is constantly looking for new ad formats
and other ways to work with clients who want to engage with the company's content.

"Technology changes fast, expectations change fast. And the
great thing about having cutting edge content is you can move with it," Lucas
says. "There's a lot of stuff we're working on now that I can't talk about because
it's for individual advertisers but it takes things to new levels, especially
when you start getting out to the tablets and mobile as extensions of the
content you're putting up on the TV screen."

While digital and new devices may fragment viewership, Lucas
sees new opportunities to engage with the audience: "If you have compelling
content, the audience wants engagement. That's just one more place to do it."

Lucas says Viacom is monetizing its mobile viewership. "We have
the luxury of doing it a couple of different ways," he says. "The beauty for us
is, it's so in demand to reach the audience that we have through mobile that it
really doesn't become a problem for us in terms of selling it out. So if we have
something that's a great solution for an advertiser's needs and we can play it
across all the screens and they want to be part of it, we'll work it into their
deal. There's not one size fits all."

As with most things, better measurement will help. "We're
delivering content across so many screens in so many different ways that it
hasn't all caught up. But I am going to say, as a major publisher of original
content we have to really look at it and we have to look at Nielsen to say hey,
you've got to get with it and you've got to catch up on measurement," Lucas
says. " It's no good to anyone if they're not measuring it in the correct
manner across the screens. I'm sure we have a lot of audience that isn't even
being picked up right now, and when measurement actually catches up, we know
that our product across all the screens is going to be even more valuable. I'm
sure it's undercounted right now."

One new form of measurement Lucas doesn't favor is ratings-plus-seven-days,
or C7, which includes more delayed viewing in the commercial ratings used for
evaluating media buys.

"I will tell you right now you're going to hear a
lot of networks talk about C7; we have a big chunk in terms of the movie
category. We have a big chunk in fast foods, telco, auto, a lot of people with
different offers and shorter term windows. They're more apt to want to go C3
than C7, and we are going to go C3," he says. "The other side of it is our
consumers: We have great content, we have great original content. They don't
wait from C4 to C7 as much as other people. They want to consume it as much as
they can as quick as they can. So [C3] works well for us."

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