Technology

Snapchat and Viacom strike a unique deal, hoping it'll boost ad revenue for both

Viacom Inc. has signed a multi-year deal with Snapchat Inc. to sell ads on behalf of the popular photo- and video-sharing app and increase the amount of programming on it.

The unique arrangement is a coup for Venice-based Snapchat, enabling the TV advertisers the company craves to buy ads on the app at the same time they purchase spots on Nickelodeon, MTV and other Viacom networks.

“We can now offer television advertisers a way to tell their stories across television and mobile in a frictionless way,” Imran Khan, Snapchat’s chief strategy officer, said in a statement.

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Snapchat’s size — 100 million daily users worldwide — has attracted many advertisers. It also offers unusual formats: Snapchat was the first major app to sell both full-screen, vertically oriented video ads and animated ads that can be overlaid on photos.

But the company has avoided banner ads and has limited the amount of data advertisers can use to pinpoint who sees which ads, hindering deals with many brands.

This deal could be a turning point, bringing Viacom’s help selling ads that run during videos produced by the media giant’s networks or by Snapchat.

"We believe we are a great fit," Viacom Chairman and Chief Executive Philippe Dauman told analysts on a conference call Tuesday morning. "I don't want to toot our own horn, but they saw in us the most forward-looking ad-sales group out there."

It’s also a significant digital play for Viacom, which is facing increased scrutiny from investors as cable viewership and revenue sags. Viacom's shares plummeted Tuesday, falling more than 10% to $36 a share — a new 52-week low — after reporting a 10% profit decline in its fiscal first quarter.

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Dauman said the Snapchat deal “is indicative of the flexible and innovative approach we are taking to grow our digital and mobile expertise rapidly and at a global scale.”

Viacom has faced criticism for licensing shows to Netflix and other video providers, boosting those companies’ fortunes while fueling its own demise. Still, the New York City-based media giant will double down on Snapchat.

Snapchat Discover, a feature on the app that promotes stories from about 20 media companies, will now have MTV and Comedy Central content worldwide. Previously on the feature, MTV was available everywhere but the U.S., and Comedy Central only in the U.S.

In addition, Snapchat will produce more Live Stories, or curated batches of user-generated videos, that are tied to Viacom events such as the Video Music Awards and BET Awards. Last year, MTV drew 12 million users to a Live Story for the VMAs, though only 5 million watched the main telecast.

“This deal between Viacom and Snapchat is a major step forward in the evolution of the marketplace, made possible by our shared focus on young audiences and Viacom's content expertise, proprietary targeting, custom marketing solutions, industry-leading sales force, and our global strength," Dauman said.

Viacom won’t be able to sell ads for Discover channels or Live Stories that are tied to other media companies or for Live Stories outside the United States.

Chat with me on Twitter @peard33

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