5 Minutes with Paramount Advertising’s Steve Ellis

Paramount is a traditional media giant straddling two worlds — linear TV and streaming — and the company’s future success could depend on how it balances those worlds.

Paramount revealed at its latest earnings report that it expects Paramount+ to become profitable in the U.S. by next year, driven by a 69% increase in revenue growth year over year. This comes just after the Super Bowl on CBS became the most-watched telecast and most streamed ever.

One of the Paramount Advertising leaders guiding the ship is COO Steve Ellis, who has been at the company for over six years. The Current spoke with him at Forward '24 (hosted by The Trade Desk) about the Super Bowl, live sports, upfront season and the future of streaming.

The following interview has been edited for length and clarity.

Do you feel like Paramount+ is ahead of schedule in terms of the revenue goals and overall strategy for Paramount?

We feel pretty good about the momentum that we have. For a while we've been going to market as an ad team in a unified way with video. Endpoints are not as important to our clients as audience and reach. Combining broadcast and cable and streaming audiences for our advertisers gives us huge amounts of scale. It's the kind of scale and reach that our clients want.

So, from the ad perspective specifically, we go to market with the sort of bundle of digital assets that we call IQ. And we feel we've done a pretty good job. And it's no secret the challenge on the linear side, but we've done a pretty good job in making that transition to the ad-supported streaming. We were first to commit to it with ad-supported tiers in Paramount+ and with the acquisition of Pluto [TV].

And we feel we have as much scale as any player in the market in terms of audience reach around premium content. We planted the flag a lot sooner than everyone else.

Paramount and CBS were innovators in the streaming space all the way back to CBS All Access. How do you balance linear TV and streaming from an advertising perspective?

A year or so ago, when John Halley took over as president of ad sales, we made that transformation into a single video team. The reason we did that was because we are trying — and I feel like now ensuring — that we put our actual customers first.

We ask our customers who they're trying to reach, and we package and orient our video advertising to their needs depending on the audience they’re trying to reach.

And that’s the beauty of having an incredibly successful broadcast slate of programming, whether you're talking about the sports successes or the programming successes, [like] 16 of the top 16 shows in broadcasting. And then you combine it with the reach that the Pluto [TV] or Paramount+ ad-supported tiers have.

Our clients have choice. Depending on the audience they want to reach, it can be a focus that leans into more than one [audience] or the other, or it can be spread across them all. And that's the transition that's occurring and that we've been managing with this IQ product, which is well on its way to being a significant portion of our ad revenue.

To hear more from Steve Ellis, listen to the latest episode of The Current Report:

We’re just coming out of the Super Bowl. We've got March Madness on the horizon. To what extent are live sports a differentiator in getting people to subscribe to these services?

Sports is America's greatest thing. It's just an incredible thing. And I would remind people that for all the talk that we've heard over the last few years and the understandable success of social platforms with the scale they have, getting 100 million people to spend four or five hours watching the same thing — or the millions and millions of people who watch sports in general, or the millions of people who watch some of our best franchises in broadcast and streaming — is hard to do and is a significantly competitive reach and engagement vehicle compared to a six-inch screen and scrolling past with your thumb on a two-second video.

[Sports] is driving a lot of our increasing creative success. We launched a creative studio around sports a few months back, and it's been wildly successful because ideas and reach and sports are a very powerful combination. So, we see it without question as a very important part of our business. And we're seeing the success leading with sports in many cases.

Sports is the entry way. But it’s not the only thing sports fans are consuming. Viewers who come to Paramount+ for live sports spend 90% of their time not even watching sports content. That's kind of incredible, right?

I think that's exactly right. When you go into any kind of customer-acquisition business, which is what streaming is, you're always looking for ways to acquire users and then maintain and optimize those users when they come into your service. In content, it's particularly useful to have things that attract attention and then it's beholden upon you to maintain that engagement. And it's a constant challenge for everyone.

We’re approaching upfront season, and for the second year in a row, Paramount is not doing a glitzy presentation. How is the process of the upfronts changing? Do you think it's as important as it was before?

It's still very important. And we feel very good about the change we made because the upfronts is so much more of a strategic conversation with our most important partners and clients. And in a world that's a little more complicated than it used to be, our approach to the upfronts with dinners is much more intimate and we feel much more intelligent.

And those are the sort of two words we try and drive in all of our trade marketing efforts, which is intimacy and intelligence. We want to be able to share true intel with our clients around new ideas, new developments, new content. And we want it to be intimate enough so people can really listen and think. And these dinners were very well received last year. We did them and we intend to stick with that plan. We're very happy with how it works and the outcome it helps us drive.

Paramount is placing a special priority on bringing small businesses to streaming. Is streaming sort of the perfect fit for that? Because there's so much ability for a smaller business to get into streaming as opposed to through linear TV, let's say on a live sport.

Let me give you some real info on that one. The first thing to remember is how much the business has changed just in the last three years here, as we constructed post-merger, a single streaming go-to-market strategy behind what we call IQ, which is a business-to-business methodology for buying across all of our ad supported streaming with suitable reach and frequency controls.

We have inventory and we have a lot of it. Second of all, through programmatic purchase, we're now serving thousands of advertisers, which was not the case in traditional broadcast and cable businesses for years, obviously. So, we've already expanded the aperture to the number of advertisers we serve through the programmatic lens. The SMB [small- and medium-size business] space in premium video is still a space that is underserved.

[It’s] underserved from a product perspective. [It’s] underserved from an awareness perspective and underserved from a performance perspective. And although those SMBs have been very active on social platforms where, to the great credit of the platforms, it's very easy to buy and very simple to execute and to do relatively small amounts of spend. We are serving already similar customers through the programmatic lens.

We want and will build a product that's much more effective and easier to use than the current versions we think that are out there. And we believe that premium video is the one space left in media with scale that SMBs have not really had an optimized experience for. There is an excellent opportunity in expanding the number of advertisers we work with. It’s streaming and ad-supported streaming and that scale that allows us to even investigate that opportunity.

The Current is owned and operated by The Trade Desk, Inc.