Viacom's investors have been watching and waiting as the company has sought better ways to tap into the profits of the digital economy. One solution could come through a new global partnership announced today with Snapchat, the popular app for sharing photos and videos that quickly disappear after they're seen.
The partnership includes advertising sales and content production that involve Viacom's Comedy Central and MTV being part of Snapchat's collection of Discover channels. Snapchat Discover debuted in January 2015, with each channel dedicated to a select group of publishers and content-producers, including CNN, People magazine, and BuzzFeed, to name a few.
Today's deal gives Viacom the right to sell Snapchat's U.S. advertising inventory, which the company is certain will appeal to television advertisers who want to tap into Snapchat's video-services premium platform. Viacom will also give Snapchat expanded access so it can produce live coverage of Viacom events.
"This is a significant deal for Snapchat, if not for revenue, then for PR and visibility," Greg Sterling, vice president of strategy and insight at the Local Search Association, told us. "It gives the company more credibility as an ad platform and will help bring new advertisers to the mobile app."
Snapchat's messaging app has been especially popular with kids, teens and the twenty-something Millennial crowd who use Snapchat to share videos and photos, with text and drawings layered on top. The messages can then be shared with a list of friends -- but the images disappear within seconds (hence the ghost logo), unless the viewer snaps a screenshot to save it on their phone.
The 2015 expansion with Snapchat Discover opened up a whole new revenue stream with plenty of potential and a well-established user base.
Good for Business?
The question now is whether Snapchat brings good business value to the table. Viacom obviously believes so and is hoping the deal announced today will help drive revenue in a changing broadcast world.
The company is working to capitalize on Snapchat's viral social-media platform to target Millennial and post-Millennial audiences. Snapchat positions itself as the best way to reach 13 to 34 year olds, with more than 60 percent of that demographic who use smartphones using the service. Snapchat posts 7-plus billion video views every day.
"Snapchat captures young audiences on an intimate and immersive mobile video platform while Viacom is the leader in premium long- and short-form storytelling for these same audiences," said Wade Davis, CFO of Viacom, when announcing the new partnership. Davis is betting that putting Viacom's marketing power behind Snapchat will open new opportunities in the marketplace.
Exclusive Content Coming
Beyond selling advertising along Viacom content on Snapchat Discover, the company can also sell remaining ad inventory on the digital media platform. That includes ads in Snapchat Stories like "New York," which serves up day-to-day life in New York City. Special "Live Stories" events like "Valentine's Day" also offer strong potential for Viacom. Snapchat Stories string together individual snaps to create a story line that showcases a 24-hour period, covering places and events around the world.
Advertising aside, the content portion of the exclusive deal could bolster even more viewership on Snapchat. That's because Viacom has vowed to create original premium video content for Snapchat Discover.
It starts with MTV's new Snapchat Discover channel, which will offer exclusive content every day, including celebrity interviews. Snapchat Discover will also host Comedy Central on an international channel that will air exclusive videos of popular comedians. Viacom also promises to create original programming for this channel exclusive to Snapchat.
In addition, Viacom will give Snapchat access to events like BET Experience, MTV's EMAs, and the MTV Video Music Awards.
All this could add much-needed value for Viacom, at a time when recent revenue has missed forecasts and domestic ad sales have declined. Viacom has seen weak performance in both its film and cable groups, and could use a home-run with Snapchat's growing user base.