Snapchat Deal Boosts Viacom's Cross-Screen Mojo

ViacomViacom sales chief Jeff Lucas's affinity for Snapchat dates back a year, to when the broadcast network first explored distribution opportunities with the popular video-messaging app.

Now the two have set up a multiyear content and advertising agreement, which gives Viacom’s sales teams the right to monetize Snapchat US-based ad inventory.

In turn, Snapchat gets partner rights to run clips from Viacom franchises like the MTV Video Music Awards. Viacom will expand the content on its Snapchat Discover pages for Comedy Central and MTV.

The deal grew organically from an existing relationship between Viacom’s in-house creative agency, Viacom Velocity, and Snapchat.

“They’re a great fit for us,” Viacom Chairman and CEO Philippe Dauman said during Viacom’s Q1 earnings call Tuesday. “We’ll be flexible with [sales arrangements] whether we sell inventory directly or in a way that generates better value for both partners.

“Snapchat saw in us the most forward-looking ad sales organization out there, one with reach, live events and other attributes that marry well with what they’re trying to do.” 

Snapchat and Viacom did not detail specifics of the sales agreement, though it’s safe to assume there is a revenue share.

“This formalized an existing relationship – with economics," said Brian Wieser, a senior research analyst at Pivotal. "They see this as an incremental opportunity, or a value add.”

Snapchat has its own sales organization, in parallel to the Viacom deal, but its monetization strategy is still coming into focus. The company has lately begun exploring an ads API program, and the company has set up meetings with numerous ad tech firms with an eye toward a potential acquisition. But it's still early days, according to reports and AdExchanger sources.

Additionally, Dauman said the Snapchat deal will support Viacom’s cross-platform reach for advertisers.

That’s a big priority for Viacom and understandably so, given the hit in ratings it experienced last year. Last quarter was no different as revenues declined 6% to $3.2 billion and US ad revenue decreased 4%.

Viacom’s CEO cited a reduction in ad loads across certain timeparts as a contributing factor to this quarter’s declines. Although the move will suppress short-term ad growth, its intent is to improve viewer experience and hence audience engagement.

“We are determined to getting back to ad growth and developing a healthy environment for marketing partners,” Dauman said. “We are looking at the general health of our networks and know we have work to do. With MTV, in particular, it could take some time since we have a new management program kicking in later in the year. We’re looking for sustainable growth in ad revenue.”

Viacom foresees a number of tailwinds working in its favor, notably the Snapchat deal, as well as advancements in measurement currencies.

Despite Viacom’s very public squabbles with TV ratings giant Nielsen, Dauman said he’s encouraged by recent improvements Nielsen has made to capture total audience, along with comScore and Rentrak’s efforts to develop products that more accurately capture reach.

Snapchat and Viacom declined to comment on the terms of the sales agreement.

 

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