With the linear television business sinking, and taking the traditional advertising business with it, Paramount Global has staked its claim to being one of the leaders in digital advertising.
On Paramount’s earnings call Monday, CEO Bob Bakish said Paramount’s ad business posted a slightly smaller decline in the second quarter than in the first quarter. He added that in the upfront, Paramount saw positive low-to-mid-single-digit growth on volume.
“And in both cases, digital is a point of strength,” he said.
Most media companies are betting on advertising revenue to push their streaming properties closer to profitability.
Bakish made it a point to let analysts and investors know that “Paramount is a leader in the digital ad space,” and he enumerated the company’s digital ad capabilities.
“Our direct digital revenue is up by strong double digits year-over-year, powered by the premium content offerings on Paramount Plus and Pluto TV,” he said. “Three years ago, we launched EyeQ, our digital ad platform, as a simple and effective solution for advertisers to connect their brands to consumers at scale. Since then, it has seen incredible growth.
“The EyeQ footprint now stands at more than 90 million full episode viewers domestically, and we expect to generate revenue approaching $3 billion this year, rivaling the best, the biggest players in digital video, and we’re building upon that strength internationally as well,” Bakish added.
Chief financial officer Naveen Chopra also highlighted streaming ad sales in his presentation.
“We are now growing [direct-to-consumer] advertising not just as a replacement for linear, but as a compelling video alternative for the long tail of advertisers who have historically relied on social media and short-form video advertising,” he said.
Paramount’s DTC ad business, mostly on Paramount Plus and Pluto TV, generated $421 in advertising revenue in the second quarter, up 21% from a year ago, or $78 million.
Traditional TV advertising is still much bigger. Paramount’s TV media group generated $1.946 billion in ad revenue, down 10%, or $228 million.
“Looking ahead, we expect to see continued acceleration in D2C advertising growth in Q3 and we’re also bullish about the long term,” Chopra said.
The company sees more integration with buy-side ad tech platforms, leading to increased programmatic sales.
Paramount sees clients in a handful of categories, including pharmaceuticals, retail, movies and travel, starting to spend more ad dollars.
“That said, we see linear advertising recovering more slowly than digital and we expect the Q3 rate of change for TV media advertising will be relatively similar to Q2 with improvement in Q4,” Chopra said.
Paramount is ramping up its international ad-supported streaming business. Pluto TV has been launched in more than 35 markets, and the company plans to launch ad-supported tiers of Paramount Plus in certain markets.
“Why is this important?“ Chopra asked. “Simply put, it means the TAM [total addressable market] for connected TV advertising is much larger than typically imagined, and we’re proving it by giving a whole new class of advertisers the ability to tell their story on the TV glass.”
