Pluto is cutting back on supply partners post-Viacom acquisition

Just as Pluto culls its supply partners, the AVOD service adds 14 channels worth of inventory

Ad-supported video on demand (AVOD) service Pluto has reduced its list of supply partners by around 15%-20% in the five months it’s been under Viacom’s wing.

Viacom announced plans to purchase Pluto for $340m in January, and closed on that deal in March. Now with the backing of Viacom’s sales team, Pluto’s national head of ad sales Harold Morgenstern said the streaming platform is growing less reliant on smaller supply-side platforms.

“We've slowly been mitigating the smaller [SSPs] that are out there,” said Morgenstern, noting that Pluto still runs inventory through bigger players like SpotX, Telaria and Roku. “We've been moving away from them because as we're growing our direct business we're tapping into Viacom's sales team.”

Morgenstern joined Pluto in February 2018, when much of its inventory was sold programmatically. He said programmatic is still an important part of Pluto’s business, but as the platform builds up its direct sales team in partnership with Viacom, there will simply be less inventory made available for indirect suppliers.

Gearing up for upfront season, Viacom announced plans to add 14 new channels to Pluto, dedicated to its networks such as Comedy Central, MTV, Nickelodeon and BET.

Morgenstern called upfront negotiations a success but explained that high CPMs are not the only part of the equation.

“We've always been aggressive on pricing. CPMs don't pay the bills. They're a means of measurement for the cost. First and foremost you need people on the platform.”

“[Upfronts] was really more about driving the volume across the marketplace and [finding] people to partner with us and come on board,” said Morgenstern, adding that Viacom was able to leverage its relationship with holding companies to incentivize them to spend on Pluto.

With all this added inventory from Viacom, Morgenstern said Pluto has “out-scaled” revenue, meaning viewers are likely seeing a disproportionate amount of promotional spots as the company looks to bring on ad partners.

That will ideally change as the AVOD service moves out of the advertising doldrums of summer and into the latter part of the year when new upfront contracts kick in.

“Right now we're using it for promotion to drive awareness to a lot of these new channels, so we're trying to be strategic with our marketing, but at the same time, could we sell more, absolutely. Our [monthly active users] and impression growth is outstripping the revenue today, in July. That's seasonality with all TV.”

Overall, Pluto’s sell-through benchmark is at 70%, but the company has not yet reached that point. However, Morgenstern said that the company saw an encouraging number of brands allocate spend on Pluto during upfront negotiations.

“We saw a big influx of a lot of blue-chip clients across every category starting to migrate [to Pluto],” said Morgenstern. “Some put down seven-figure budgets and some put down a couple hundred grand just to test.”

As of Viacom’s second-quarter earnings report, Pluto has a monthly active user count totaling 16 million, up 31% year-over-year.

In that earnings report, Viacom noted a 2% deceleration in US ad revenue growth. That number marked an improvement from a 4% slowdown Viacom saw in the fourth quarter of 2018, attributing much of the uptick to the Pluto integration.

Viacom seems to be making streaming a priority. The media company was also part of a $40m investment round in July 2018 in vMVPD Philo, and in June Viacom announced plans to launch a subscription streaming service for BET, called BET+.

BET+, developed with Hollywood mogul Tyler Perry, is slated to host original content. As for Pluto, Morgenstern said he could see a future where the AVOD service houses originals.

With the weight of Viacom behind it, Morgenstern also said that Pluto is looking to expand into Latin America and Canada.

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