WALKER JACOBS: It goes to the core of our strategy and philosophy as a sales organization. If you look at the way we are structured and the way we go to market, our sales team is designed to become experts on our customers' business. As opposed to a sales organization that has our own brands and our own products that we are out trying to push, what we are really trying to do is become experts on our customers' business, and to develop deeper strategic partnerships with advertisers to really try to become long-term business partners with them and help them grow their business and develop their customer base.
When you look at Branded Entertainment, it gets to the core of what so many of our partners are trying to accomplish: How do we take advantage of digital distribution and new ways of integrating products? How do we communicate brand positioning and entertain consumers in an engaging way? There are so many great things about technology, and so many innovations over the last 20 years. But it’s also continued to fragment audiences, and I think that having product and brand positioning embedded into the core of the content is something that more and more marketers are interested in exploring.
A lot of media companies and agencies have tried Branded Entertainment over the past few years. How do you plan to go about it?
There was a few ways to do it. We could do it around our core network brands, we could do it around by developing our own studio. Rather than doing those things, which don’t come without a lot of risks and financial investment, we decided, to just go out and find the best. The talent that they have on the roster at FunnyOrDie is amazing – particularly the founders and partners of the site, Judd Apatow, Will Ferrell and [writer] Adam McKay.
I think if you would have asked FunnyOrDie’s leadership, prior to our partnership, what opportunities they would they like to explore, they would have said that they needed broader distribution. What Turner Broadcasting brings to FunnyOrDie is the power of our television networks, the power of our digital distribution, and the power of our sales organization and relationships in the marketplace.
So often in our marketplace, it's about favors and one-offs and trying to get production companies to do this extra piece for an advertiser. In this case, it's actually FunnyOrDie's core business. They've built their business around developing content for advertisers, which means they understand the service aspect of it. They understand the market aspect of it, and they have a lot of experience doing very high-quality programs.
Our strategy is to grow Branded Entertainment integrations across the web and television; to separately grow digital-only Branded Entertainment; and third, to grow the media business on FunnyOrDie.com from a sponsorship and ad sales perspective. Our team is responsible for managing all three of those initiatives.
Will the new Branded Entertainment initiative influence Turner’s overall digital ad strategy?
Very much so. Our digital business are structured and organized in a way to be able to take three bites of the apple. The first bite is digital-specific initiatives. Whether it's around CNN.com, or whether it's around Nascar.com, we have marketers that have initiatives around certain audiences. If they want to buy digital advertising or marketing programs with very specific verticals in mind.
The second bite of the apple involves doing horizontal digital buys across our properties, which collectively reached 100 million monthly uniques on average last year. In that sense, advertisers can buy specific audiences. The third bite is the cross platform bite of the apple that involves the strategic partnerships with the NBA and PGA Golf, and the deep integrations that extend across our online and offline offerings, whether it's our TNT, TBS, CNN television networks, live events and programming, or mobile and PC though newer properties like Bleacher Report. Branded Entertainment is the newest of those tactics.
Aside from the fact that you own or partner with a variety of entertainment entities, what’s the connective tissue that brings all of these parts together for advertisers?
If you look at the portfolio we've built, everything starts with video. And we ultimately think of ourselves as a content company that is trying to deliver video and entertainment to consumers wherever and however consumers want to watch it. That’s where it's been our audience development strategy and why we've had so much success getting so big.
When you look at Funny or Die and Branded Entertainment as an advertiser tactic, it's a really effective way for marketers to communicate with those audiences and consumers we've developed across every platform -- a platform neutral tactic that can naturally stand at each and every consumer touch point we have, whether it's our television network or whether it's digital platforms.
How has the trend toward audience buying on the part of advertisers and agencies affected that view of what Turner has to offer them? What are your thoughts on the trend to programmatic?
Most people, when they're evaluating audience are doing themselves a disservice by greatly discounting the quality of the media placement and the branded environment where the media placement is running too much. They're discounting the impact of that too much, and they're focusing instead too much on the end-user characteristics.
What I believe, what our company's philosophy is, is that both context and brand matter. The impact of the advertising message is inextricably linked to the media environment where the ad is placed. Turner is really good at helping marketers develop tentpoles, to develop marketing strategies and then using our audience to help them activate, in a contextually relevant way.
I know of no media company that is exceptional at selling both context and brands and selling audience, and the reason, I believe...is because those two strategies are at odds with each other. What we have decided to pursue as a publishing and ad sales strategy, is to try to be exceptional at selling sponsorships, integrations and audience and brand, and content. What we believe is that helps make our environment that much more valuable to our advertising partners.
So does Turner not participate in any real-time bidding environments? What about private exchanges?
We don’t participate in any real time bidding or private exchanges at this point. It's a very funny thing, because to the untrained eye, we might seem like an unsophisticated old media company that is scared to embrace technology. The opposite couldn’t be much closer to the truth.
We've invested a tremendous amount in technology and understanding our audiences, and being able to develop analytics and insights to marketing partners, leveraging the same and similar technologies that audience-based targeting harnesses. We believe the downside of RTB and private exchanges is that it fragments audiences.
To put it another way, if we are selling a website and a marketing integration to an advertiser, they're buying that website because they like the content, they like the brand, they like the audience and they think it makes sense for what they're trying to accomplish. It checks all their boxes.
Now, imagine now that one of their competitors has come in on an exchange and used advanced targeting to cherry-pick the audience. And imagine all of their competitors doing the same. Imagine it at scale where we have maybe 500 or 1,000 advertisers that all have data overlays, and are looking at our impressions, and deciding which ones they want to buy.
When that happens, the audience that I'm representing to my best partner who came in to invest their marketing dollars to buy the integration we promised is actually no longer reaching the audience I’m selling to them. We are trying to protect the integrity of our audiences for our best marketing partners. The mistake that so many media companies have made with RTB and private exchanges is allowing the low end of the marketplace – with this quote/unquote "remnant" interest – to pick over the audience at the expense of their best advertising partners.
Do you feel the scale of 100 million unique visitors is what insulates you from having to participate in RTB environments?
That’s correct. We are not ostriches with our heads in the sand either. When we have great advertising partners that are investing in our brands and investing in our platforms, those are the partners that we activate with using audience-based targeting and using our Turner Network product. We reserve that for the premium marketplace. It's not something that we sell to the remnant marketplace.
The other way to think about our strategy is we are not optimizing yields. We are not trying to sell each and every impression at whatever the marketplace will pay for it. We are trying to protect the value of the total audience and optimize the top line revenue. Optimizing the top line revenue might sometimes mean not selling every impression, and might sometimes mean selling impressions at different price points based on the circumstance. It's applying common sense to protect the quality of the asset so that it remains a high-value audience for the best marketing partners that we have.
Mobile is an area, despite the fast growth, that is still difficult for marketers to crack. Is mobile advertising a major part of Turner’s revenue stream?
We've gotten a lot smarter about how to help advertisers integrate on mobile and on tablet. We did a really nice job, when we re-launched our CNN iPad, iPhone and Google Android apps. We did a really great job with the NCAA Division 1 Men’s Basketball Championships on March Madness Live. The representing sponsorships that we sold on iOS and Android were incredibly well received both by consumers and advertisers.
Having said that, let's talk about the downside of the mobile marketplace. Most media companies have just slapped inventory on there haphazardly. And then they all wonder why they're 90 percent unsold. I have not yet spoken to a single advertiser that has demand for that inventory. It's like just because we create inventory by putting a cynical ad unit on a mobile website, doesn’t mean it's worth anything.
Where we've had a lot more success is by extending integrations and content-based advertising programs to mobile and to the tablet from television and from the Web. That’s where mobile is really working and it's really strategic. We still haven’t been able to effectively create a mobile marketplace, however. There's way too much inventory and basically no demand. As a result it's dominated by a handful of mobile ad networks that are charging very low prices because there's way more inventory than people at one time.
The question for us is, how do we continue to develop high-value placements in mobile and on tablet that advertisers will find value in and want to invest in because we are aligned with their strategy of communication? I think we are doing a good job, and I think you'll see us continue to do a better job.