30 March 2015

SNL Kagan

By Joseph Williams

About This Feature
In-depth, insightful interviews with movers and shakers in SNL's sectors, including executives, analysts, investors, academics and authors.
Scripps Networks Interactive Inc. opened its 2015 advertising season with an event at the Four Seasons Beverly Hills.
2015’s forward sales season comes at a time when the television advertising market is arguably being challenged by digital channels vying for the same dollars. For its part, Scripps claims they are able to rise above the fray by appealing to uniquely endemic advertisers and offering a range of digital platforms to supplement their linear TV offerings. But challenges still remain, with cross-channel audience measurement remaining one of the most obstinate elephants in the ballroom.
SNL Kagan caught up with Steve Gigliotti, Scripps’ chief revenue officer, after the event to discuss the prevailing winds. What follows is an edited version of that interview.

SNL Kagan: How do you see the consumer shift to digital channels and over-the-top video affecting the traditional television advertising model, particularly as it pertains to the upfronts
Steve Gigliotti: If you take the usage, hours spent a day on each platform, we're over time. There’s more hours being consumed than there is time to consume, particularly if people have to sleep at some point in time. People want to consume media while they’re doing other things. They want to consume media in other places where they may not be able to right now, and they don’t want to consume it necessarily the same way they’ve been consuming. I think our brands translate to all those platforms, and we'll keep looking for ways to get our content onto those platforms. And look, the ability to measure those audiences trails behind all this. The platforms themselves and the technology are moving very quickly. Our ability to translate content from one platform to another is getting very, very good now. People don’t want to watch a half-hour show necessarily on a phone. They want to watch smaller clips on a phone, maybe longer clips on a tablet, and we're getting really clever about what we can do in that space. But measurement has to catch up to this because advertisers get a little leery because they don’t have all the money in the world to spend on all these platforms. They have to figure out where the audience is and have to figure out where the return is. That's what I think lags behind.
Do you see measurement capability catching up with the technology anytime soon
It’s starting to. I'd say the innovations got out of the box several years ago, and some of the measurement companies — without naming names — probably took a little longer to figure out whether this was going to be permanent or whether this was going to be temporary. And you can understand. These are not inexpensive things to do. Now they’re moving in that direction. The end result is they're trailing behind, and agencies and advertisers are cautious about where they’re spending their money in the new places. But they are spending it, and the predictions are, as this develops, they'll spend more and more in these platforms.
So are we waiting on the traditional firms to catch up, or will we see new companies define the next age of measurement
I think you’re going to see both, and I think that’s healthy. I think you're going to see the traditional companies look to develop technology or buy companies and have the measurement ability from that. We're also going to see other companies step into the space and create measurement opportunities. You know, a lot of the media companies have complained for years that there's only one measurement company, and it's a monopoly. Nielsen [NV] has done a decent job of measuring audiences, but what I think is going to happen now is competition is going to create a faster, finer amount of measurement that's going to benefit everybody. I'm all for that because I know my programming draws an audience that spends money.
So how do these new dynamics with new multiplatform opportunities affect the traditional sales methods like the upfronts and the scatter markets Do you see the balance shifting between the two
The more options that are available to advertisers (and keep in mind that a large percentage of my advertisers are endemic to the home, food and travel categories), we have to come out and explain, “Here's how these pieces work,” and help them understand how they can utilize them. I don’t think explaining how our programming and our content resides on platforms and the interaction consumers have on platforms is ever going to be something that we won't try to explain to people. If there is an upfront market, we'll always have an upfront process similar to this one. If there's no market and suddenly advertisers say, “We don’t think there's a reason to buy all at one time,” OK, I'll still do these kinds of presentations at different times of the year because there will be a need for me to bring my products, my programming, my marketing opportunities on all platforms. The more there are, the more diversity there is, the more challenging it might be for somebody to pick that up. So we want to make sure we're always out there.
So Scripps is not going to terminate its upfront anytime soon in favor of smaller, private meetings like some other networks began doing in 2014
I think there's still a value in showing the whole market one thing, and I'll try to continue to do that as long as it makes economic sense and as long as there's an upfront payoff for it when it happens.
Anything other insights on the trajectory of the upfronts you’d like to share
You know, there are a lot of questions about whether the upfronts will be as big or not. I've got to tell you, our calendar upfront, [which] takes place on a January-through-December calendar for those with a different budgeting process, we had a record calendar upfront. And you think about that: there’s no difference between the two upfronts from the standpoint of putting money down over a long period of time, making large commitments. We have a lot of endemics in the calendar upfront; we always have. But our growth is double digit in that calendar upfront. Also, advertisers will give you a hint about how they think about the marketplace by options, when they pull options at an upfront. Options have been doing incredibly well. So you've got a couple of boats in now.
The scatter market has been really strong. The fourth-quarter scatter market was really strong. Options are almost at record lows, or if not record lows then very low. And the calendar upfront commitment, a long-range commitment is a record for our company. So I step back and I say, “Wait a minute, before we get really concerned, let’s see how this unfolds because I think we may see a pretty strong upfront here.” All the indications would read to me advertisers are willing to put their money down. Will advertisers be more selective I haven't been in a year of advertising — and I've been in the business a long time — where they haven’t been more selective than the year before because they have more choices to make and they have to be more critical about their selection.

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