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Viacom to Boost Advertising Sales

Zacks Equity Research

In a bid to revamp the advertising revenue, Viacom, Inc.’s (VIAB) introduced Surround Sound that promotes target advertising and eventually favors its advertisers. To carry out this process the company has implemented Adobe Systems Inc.’s (ADBE) AudienceManager, a popular product that offers data management solutions to its client.

It is believed that most advertisements do not reach the target audiences. Moreover, with the availability of so many digital platforms, it becomes rather impossible to track the taste and preferences of the target audiences.

Furthermore, the recent slump in the global economy has also forced many advertisers to reduce their advertisement budget. According to a data released by eMarketer, it is believed that about one-third of the marketers in U.S. will focus on target advertising.

Thus, introduction of Surround Sound by Viacom will enable these advertisers to gain profound knowledge about their target customers. Moreover, Adobe’s AudienceManager, with the help of cookies and pixel tags, will play a leading role to collect information on customer taste and preferences.

Viacom, a large media content company, offers most of its entertainment brands through television, motion picture, Internet, mobile and video game platforms across the globe. Advertising forms an integral part of such media related companies.

In 2011, Viacom’s advertisement business generated 30% of  the total revenue. However, in the last quarter of fiscal 2011, the company reported decline in advertising revenue, which we believe has triggered the company to introduce such methods to gain the confidence of the advertisers.

Presently, the company is facing intense competition fromother media companies like News Corp. (NWSA) and Time Warner Inc. (TWX).

We maintain our long-term Neutral recommendation for Viacom. Currently, it has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

Based in New York, Viacom Inc. is a leading entertainment content company that operates primarily in the U.S. and Europe.

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