Even before being branded Velocity last week, Viacom’s integrated marketing and custom content operation was already doing brisk business for its music and entertainment networks group and its advertising clients.
“Every client that has dealt with Viacom Velocity so far has increased their spending, every one,” says Jeff Lucas, head of ad sales for music and entertainment at Viacom. “Our clients are starting to double down because they realize they’re getting a lot of value here and they’re going to get a better return.”
Velocity will be a big part of Viacom’s pitch to clients in the upfront. Clients won’t be charged separately for Velocity’s efforts. “This is all part of a comprehensive buy,” Lucas says. “Basically it increases the value of what’s being put on the table.”
There will still be a cost-per-thousand rate attached to media buys, and guarantees attached to the deals, but what clients are buying is what Velocity delivers.
Many TV networks have units devoted to creating integrated campaigns for clients. Others have groups that create custom content. Viacom, particularly with MTV, has long been active in these areas and is upping the ante by combining them in a one-stop-shopping arrangement.
Velocity’s Triple Play
Lucas says Velocity consists of three parts: integrated marketing, creative content solutions and insights. It has been building up its capabilities over the past two years, increasing the staff under integrated marketing executive Dario Spina threefold to a few hundred people. And Niels Schuurmans has been brought over from Spike as executive VP, Viacom Velocity creative content solutions. Spina and Schuurmans report to Lucas.
“This group has really been evolving and it’s evolving off what our clients are asking for. They’re asking for more integrated marketing solutions of a higher quality and caliber and we’ve been raising the bar in the last two years along with this investment,” Lucas says.
Lucas says client have less resources, so they need more bang for their buck. “We look at what we do as basically extending the message [delivered via commercials] for clients and enhancing their campaign.” Velocity delivers that with integrated campaigns that amplify the advertising message and through custom content that adds earned media to paid media.
“We used to have marketing discussions as a result of a media discussion. Now we want to start with a marketing and content discussion and go down a path of delivering custom content and a strategic campaign based off our insights,” says Spina.
Last year, Viacom created a campaign for client Pizza Hut that was integrated and featured custom content.
“Pizza Hut wanted to connect with millennials and have a pop culture-based content campaign,” says Spina. “So we pulled together across networks— MTV, MTV2, VH1 and CMT—plus digital and social. It was all around up and coming original music content, so we delivered musical performances.”
The campaign—called Discover Great, playing off Pizza Hut’s Making It Great slogan—included more than 60 pieces of video music content from bands such as Walk the Moon, Atlas Genius and Capital Cities. Spots on the cable networks drove viewers to a Make It Great video hub where the performances could be viewed. For the client’s first effort at a music- content program, the results were “pretty amazing,” Spina says.
The average user spent almost 10 minutes on the hub, and there was a total of 14.7 million minutes of viewership time, which translates into a great deal of added engagement with the Pizza Hut brand.
“Believe it or not, we had a video completion rate of all these pieces of content to the tune of 98%,” Spina adds. “So it just goes to show that a contentbased campaign is not really the future. It’s kind of here and now for marketers to really extend their campaign messages.”
DESPITE ITS SIZE, A+E HAS SMALL IMPACT ON DISNEY STOCK
As a joint venture of giant Walt Disney Co. and Hearst, A+E Networks tends to fly under Wall Street’s radar. But last week in a research report, analyst Todd Juenger of Sanford C. Bernstein, tried to take the measure of the TV company behind Duck Dynasty and Pawn Stars.
The task is not easy because Disney doesn’t break out A+E’s numbers, Juenger wrote. Instead, its net income is baked into the equity interest line within Disney’s Media Networks segment. Nevertheless, he estimates that A+E generates about $3.7 billion in annual cable network revenue, noting that it has more U.S. revenue than higher profile TV outfits including AMC Networks, Discovery, Scripps and CBS.
With that revenue, Juenger figures the company is worth about $23.5 billion and that Disney’s 50% slice of the equity is more about $6 a share, or 8% of Disney’s value.
Despite its size, Juenger argues A+E isn’t a big reason why investors buy Disney. But neither does it keep stockholders up late at night.
“Evidence that [A+E] is not central to most investors’ view on Disney is the fact that the stock price doesn’t seem to have any observable correlation to the goings-on at [A+E] (either good or bad). With the recent Duck Dynasty flare up, there was no discernible connection to Disney stock,” he wrote.
Right now, A+E performance is strong, Juenger said. There are opportunities for growth in affiliate fees, which appear to be low compared to viewership. But it might be a victim of its success in creating a string of high-rated shows. (Five series generate about 35% of ad revenue, he estimated.)
“The bigger the hit shows become, the more networks depend on them and the harder they are to replicate in the future,” Juenger said. ”We do think there is more risk to the downside than upside.”
Disney investors seem to be more worried about other things including growth trends at ESPN, Juenger added.