When the television industry decided to sell ads based on commercial ratings last spring, no one faced a bigger challenge than Hank Close, head of ad sales for Viacom’s MTV Networks.
During the upfront negotiations, Mr. Close was able to convince ad buyers to stay with program ratings for the fourth quarter for the MTV networks. But after changing the commercial structure on its channels and devising creative ways to retain viewers, MTV Networks beginning in the first quarter will have to deliver on commercial ratings, or C3.
Commercial ratings were a problem because the company’s biggest networks, MTV and VH1, lost more than 15% of their young viewers during breaks. At the same time, flagship network MTV’s program ratings in key demographics were down about 20%. That helped limit Viacom’s domestic ad growth to 5% in the third quarter, with a similarly small gain forecast for the fourth quarter.
Mr. Close said MTV Networks decided not to use C3 because it believed the ratings system wasn’t ready. Also, “It affected a couple of our networks in the family in a very big way. We needed a little bit of runway to work out and redesign the commercial experience,” he said.
That meant walking away from some business in the upfront as part of a strategy designed partly to maximize scatter on some networks and to meet goals in translating the old program rating goals with the new C3.
Right now, Mr. Close is optimistic.
“As far as the marketplace goes, I love what I see,” he said.
For one thing, MTV’s ratings rebounded in the fourth quarter thanks to new hits like “A Shot at Love With Tila Tequila.”
And prices are rising sharply in the scatter market, which should get stronger as the effects of the writers strike become more pronounced.
“You’ve got three of five networks in broadcast being close to out of sale. I think it’s pushing a good amount of money into the cable marketplace and I love the way that sets up, because once that money does come into the marketplace, it will very rarely leave,” he said.
Mr. Close also is changing the way commercials run on MTV and VH1. About two-thirds of the shows on those networks have gone to three breaks per half-hour from two, creating shorter pods. That’s already created higher retention. “Until the audience knows what to expect in terms of the length of the break, you’re not going to see your best result,” he added.
MTV Networks is looking at other ways to increase retention as well. Mr. Close said MTVN has developed 10 to 15 ways to weave content through breaks to make commercial time look more like programming, thus keeping viewers interested. It’s looking to use crawls and other split-screen combinations of content and advertising to keep sets tuned in.
Some advertisers are leery of sharing screen time, but strategies that marry show content and ad messages “frankly are good for everyone. They’re good for our brands, they’re good for the viewer, they’re good for the advertiser.”
Each execution is different, which means “the challenge in that is how do you get the scalability, how can you get to the point where you’re doing that in every pod,” Mr. Close said.
These pod-busting techniques are something many networks talk about.
“I have seen some of the things that have been said or written about the efforts some of the other networks are making, particularly in the broadcast world,” he said. “I really believe that we are on the forefront of re-creating the commercial experience for the viewer and we will continue to be.”
Mr. Close said MTV Networks is also stoking its digital revenues after reorganizing its sales force, and should chalk up gains that are double to triple the rate of the industry overall.
“Advertisers are coming to us in the digital world because they see us as a leader among traditional media companies in the digital space,” he said.
AT A GLANCE
Name: Hank Close
Title: President of U.S. ad sales for MTV Networks
How long in current position: August 2006
Year of birth: 1958
Place of birth: New York City
What to watch for: Mr. Close will try to grow MTV Networks’ ad revenues as the new commercial rating system cuts into its audience delivery.
Who knew: “I try to find five minutes in the office every day to do a little guitar playing,” Mr. Close said. He’s got four guitars in his office, two of which he doesn’t play because they are autographed by Peter Frampton and the Who.