When Jon Steinlauf takes the stage next week at Madison Square Garden for the first ever Warner Bros. Discovery, following the merger of the two brands, will be the first look advertisers will have of how the media giant will compete in the ever-expanding streaming landscape.
Steinlauf is now tasked with leading the company’s advertising strategy at a time when the stakes are higher than ever for TV players, who are still navigating a shrinking linear landscape as they prepare for a future of streaming. With streamers under increasing pressure to generate revenue and drive subscriber growth, Warner Bros. Discovery largely depends on a successful ad model.
This isn’t the first time that Steinlauf, Discovery’s director of US advertising sales, has found himself reshaping the ad structure of a fledgling company. The veteran advertising executive helped merge the advertising efforts of Scripps Networks, home to the Food Network and HGTV, among others, with Discovery in 2018, where he held the role of director of US advertising sales.
Now his arsenal includes premium original programming from HBO Max, plus sports content on networks like TNT and TBS, as well as food, home, science, animals, and other unscripted content he’s been selling for years. The marketing world will closely follow the company as it builds its new streaming product.
The marketing director spoke to international website AdAge about the company’s future, in which he mentioned that he is presenting separate offers for Discovery+ and HBO Max, which he says will be more effective for the company’s strategy as well as the market. Ads.
Speaking ahead of the official start of Warner Bros. Discovery on May 18, Steinlauf assessed the current market situation and told a little about the brand’s planning after the merger. Check out the translated executive interview:
What is your focus on this new role this year?
Jon Steinlauf: The most important part is the sport: Turner Sports, Warner Bros. Discovery Sports now. What we have now in the sport is really amazing and long term.
We are very excited about March Madness and the NBA, and we are now in our first year with the NHL. We are sharing this with Disney, ESPN and ABC. But in June 2023 – which we are selling in this initial cycle – for the first time ever, the entire final series of one of the top four professional sports will be played on a cable network in quotes. We’re starting to think about losing the label of cable networks and broadcast networks because they’ve created, I think, an unfair valuation in the market.
And then there’s the MLB contract, which is also on the first [ano de um contrato de sete anos]. We share this largely with Fox. We head over to the League Championship Series, for great primetime inventory through October until the playoffs.
JS: We think of it as these complementary services. What advertisers look closely at when it comes to advertising for streaming services is engagement, and low commercial loads are a big part of positive engagement. We look at it like the quality of the content, the ability to get advertiser engagement, the demographics being younger and more diverse, and then there’s the idea of reaching families.
There is a real battle going on among advertisers to gain access to the 40 million homes in the United States that have opted out of cable TV. Because, in many cases, the heads of households are under 40 years old. So there’s an ongoing battle to try to penetrate these cable-free households to get new viewers, extend reach, and get younger viewers. We like to have this pairing of sister services between HBO Max and Discovery+.
You’ve been in the cable TV market. How are you thinking about ad sales for these channels?
JS: Many of the major streaming services are owned by companies that also own major TV networks, so there is an interdependence in the negotiation between Hulu and ABC, or Peacock and NBC, or HBO and Discovery. There’s a deal going on for linear TV, there’s a deal going on for what I would call non-linear TV. And it’s not just streaming, but in our case it’s Bleacher Report and CNN.com, it’s video on demand, it’s authenticated apps.
We have a lot of specialist, vertical brands that are important to advertisers. They may not have 3 million people watching at night, they may only have 200,000 or 300,000 people watching, but they contribute to reach, they contribute to sponsorship platforms. It helps to have all these big brands because advertisers prefer brands to just commoditized inventory. And a good example of a great new brand in our portfolio is Magnolia.
Usually we in ad sales say “invest where there is a good brand or where we can build a good brand”. Because I think brands are hard to build in media, especially TV these days. So when you have a good brand, it’s worth trying to find growth wherever you find it.
Like Warner Bros. Discovery thinking about its ad strategy for a future unified mega-service? From an ad sales point of view, how do you think about selling your properties on a single platform?
JS: A really, really good question that we’re thinking about right now in ad sales, is it one brand or two? In the consumer world, other members of our leadership team will decide how to best market combinations to consumers and how to bundle and price them, so what is ad-free? But talking specifically about the ad sales for the years 2022 and 2023 ahead of time, we believe that coming out with a separate offer for Discovery+ and a separate offer for HBO Max will better serve our purposes and the purpose of the market.
If you are an advertiser and follow our company, where we position ourselves as lifestyle leaders: HGTV, Food Network, Animal Planet, Oprah, Magnolia, Cooking Channel, TLC, Discovery Channel, MotorTrend. So these are all very clean verticals, without a lot of natural predators. Endemic advertisers in these categories will gravitate more spend to Discovery+. For the most part, we don’t sell brand-specific Discovery+. We’re primarily selling an audience segment, and a lot of that is being done through programmatic and addressing tools.
HBO Max is really built around scripted dramas and some comedy, like the Lakers series or “Succession”. Now, not all of these programs are available with ads, we are still working on what has ads and what doesn’t. This will work itself out. But I believe advertisers who want to be on HBO Max may be different from advertisers who want to be on Discovery+. Some will want both, but some will want just one or the other.
You’ve been through mergers before. How might your approach to advertising be similar or different this time around?
JS: Having gone through one of those four years ago is helping me because I remember – I’m having a lot of flashbacks. Being at home for two years with the pandemic and then coming back feels like it’s still a fusion [risos].
The part of it that I find most exciting is walking into a conference room, with four people from each company in the room and we just talk about ideas. How can we improve in what we do? We always want to be better, we always want to reach our potential. And what do you find when you have four smart people who are inherited from Warner and four smart people who are inherited from Discovery? Now we’re sitting in a room together on the same team. What are your secret formulas? How you do it? How do we do it? Nobody is better at everything. It’s about sharing best practices and finding ways to learn from each other.
The second thing is the knowledge you gain when you merge with a big competitor. Now for me, this is the second time in four years. You learn a lot more about the market, what the advertisers are doing, pricing, packaging, mixes, just strategy. You become much smarter. I had two chances to see the entire game plan of a major competitor.
This article is a translation of the writing by Catie Keck to the website AdAge.
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