MENLO PARK, Calif. — CBS All Access can’t serve up addressable advertising inventory fast enough for marketers hungry to reach consumers watching premium video online. That was the upbeat outlook shared by CBS Interactive CEO Jim Lanzone during his keynote address on Tuesday at Variety’s Silicon Valleywood presented by PwC.
“There’s not a form of advertising hotter than OTT video,” Lanzone said in a Q&A that kicked off the daylong gathering at Rosewood Sand Hill resort. “It’s premium, it’s addressable. We are sold out basically at all times.”
Lanzone noted that much of the bulk growth in digital advertising is driven by direct response marketers, or what he described as “the bottom of the funnel.” The premium-content approach that CBS Interactive has focused on — from CBS All Access to the ad-supported free services CBSN, CBS Sports HQ and ET Live — is designed to deliver the most valuable inventory from a CPM basis rather than tonnage a la Google and Facebook.
“That’s why building SVOD and AVOD platforms has been such a priority for us,” Lanzone said, noting that some two-thirds of CBS All Access’ estimated 2.5 million subscribers still take the lower-priced service that has advertising in original series such as “Star Trek: Discovery” and “The Good Fight.” The ad-supported services have become a vital tool in a short time.
“Advertisers want more premium video from us and this is the way to bring it to them,” he said. CBS All Access and the AVODs “work together in a nesting-doll approach.”
Lanzone said the news, sports and entertainment services were launched in response to consumer demand that CBS Interactive was able to glean from analyzing user behavior across all of CBS’ digital footprint. He emphasized that CBS Corp. is well positioned as Disney, WarnerMedia and Apple also move into the streaming arena.
“We’re about to see the space get a lot more crowded,” Lanzone said. “We’ve been able to consistently understand user behavior. And we know we have a tiger by the tail. The consumer wants more content from us.”
Lanzone also stressed CBS Corp.’s bona fides as “pure content company with purity of mission to understand why we’re in this space and how we compete.” He acknowledged that there are likely to be challenging decisions ahead as more outlets move into the streaming aggregation market such as Pluto TV, which was just acquired by Viacom.
“There are a certain number of seats on this rocket ship that is about to take off. There’s a seat on that rocket ship for us,” he said.
Lanzone was sanguine about the state of the digital-native content market, suggesting that CBS Corp. was smart to sit out the investment and acquisition rush of the past few years for such firms as Vice, Buzzfeed, Vox Media and Machinima, which attracted big dollars from Disney, NBCUniversal and others.
“We weathered the new media gold rush that happened in the past five years,” Lanzone said. “Coming from the internet side, we had a different way to view those companies and what they might be worth. As the prices went up, we stayed very conservative on them from an acquisition standpoint. In hindsight those were the right moves for us.”
Variety co-editor-in-chief Andrew Wallenstein pressed Lanzone on the big-picture M&A question hanging over all of CBS Corp. at present, as expectations grow for a reunion of CBS and Viacom in the not-so-distant future. Lanzone would not comment on the prospect for a deal, but he said the streaming platforms CBS Interactive has built are sturdy, wholly owned and have plenty of room to grow.
“It’s easy to plug and play with us,” Lanzone said. “I like that there are a lot of different opportunities out there that will be additive to what we want to do.”
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