Viacom Held Back Linear Ad Inventory for Scatter

Pluto TV, digital used to meet upfront demand
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Viacom said that it held back linear advertising inventory during the upfront, using its more targeted assets, including Pluto TV, to meet demand.

As a result, the company said, it expects to be able to cash in on what it expects to be a strong scatter market.

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Bob Bakish

When Viacom reported earnings for its fiscal third quarter on Thursday, it marked the first time in 20 quarters that the company’s ad revenues grew.

Some of the 6% increase in domestic ad sales was due to the shift in the Easter holiday. And a big chunk was due to an 84% increase in what Viacom calls Advanced Marketing Services, which includes its advanced advertising products, digital and social media and Pluto TV, the streaming service it acquired earlier this year.

Related: Viacom: No Word on CBS, But 3Q Earnings Increase

Pluto TV

AMS now accounts for 20% of Viacom’s ad revenues. Viacom CEO Bob Bakish said during the company’s earnings call with analysts.

Vantage, Viacom’s targeted TV product was up 80% and social was up 50%. The company also sold addressable inventory through DirecTV Now and AT&T Watch,” said CFO Wade Davis during the call.

Davis said Pluto has quickly become an important part of its AMS business.

“We're already using Pluto inventory to fulfill Vantage campaigns. We're using Pluto inventory to satisfy certain areas of bundled delivery. So, it's an integral part of not only AMS, but the overall ad solutions business,” Davis said.

He added that without Pluto, “we still would have grown domestic ad sales in the quarter and Pluto, it really wasn't the only bright spot in AMS.”

Pluto TV was also a part of Viacom’s upfront.

In recent years, Viacom was known for offering relatively small price increases in order to maintain volume in the upfront. This year was different, the executives said.

“We went in with a carefully crafted strategy to take full advantage of both the market dynamics and our unique assets, which resulted in our ability to drive price increases and capture meaningful overall volume, while preserving significant linear inventory to continue to capitalize on an extremely strong scatter market,” Bakish said. “ Pluto TV was a big contributor to add sales growth from the quarter and the upfront discussions.”

While focusing on getting double-digit price increases, the Viacom executives did not say that volume rose as well.

“We were able to capture significant volume in the upfront," Davis said. “A key part of the strategy was to pull back the amount of linear inventory that we sold in the upfront having the breadth as portfolio that we had was really what enabled us to absorb the demand while still holding out linear volume.”

Davis declined to talk about volume or sellout level for what he said were competitive reasons. “But we did hold back significant linear inventory just this of balance really well as we head into our market, unfolding going forward we think is probably stronger than we've seen in a long time,” he said.

When Viacom bought it, Pluto TV was able to sell only about 50% of its ad inventory. At the time, Viacom saw that as an opportunity.

Since the acquisition, Viacom has pumped up the programming on Pluto TV, which has increased its unique users by 50% to 18 million per month and increased the amount of time viewers spend on the service.

“The absolute volume of inventory on Pluto is scaling so rapidly, that we're actually still under 50% sold. And so, as volume continues to scale rapidly, we have an incredible amount of room to run from a monetization standpoint,” Davis said.

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