CMO of the Week: Discovery Direct-To-Consumer's Pato Spagnoletto

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When Pato Spagnoletto came to Discovery, Inc. in March 2021 to become the company’s first global chief marketing officer of direct-to-consumer, he hit the ground running to execute a marketing strategy for the company’s Discovery+ streaming service, which had launched just two months prior. 

When Pato Spagnoletto came to Discovery, Inc. in March 2021 to become the company’s first global chief marketing officer of direct-to-consumer, he hit the ground running to execute a marketing strategy for the company’s Discovery+ streaming service, which had launched just two months prior. 

Though joining the fast-growing service had a lot of parallels to his previous work at Hulu, where he spent four years in senior roles (most recently as EVP - Head of Marketing), there were plenty of key differences, too. 

“When I joined Hulu in late 2016 they had about 11 million subscribers and had been in business for about eight years,” Spagnoletto says. “We are nine months into it [at Discovery+] and at 18 million subscribers globally, so the trajectory is a lot steeper but it's also a different time [of] transition into streaming habits across the world. I don’t want to call it luck, because it’s been a lot of hard work by Discovery over the last 30 years that’s put us in a position of success in the last eight months.” 

And that legacy has proven to be Discovery+’s key market advantage in the so-called “streaming wars,” Spagnoletto adds, noting that Hulu built a brand from scratch and eventually carved out a niche with originals and live TV. “For Discovery+,” he says, “honestly it’s just a continued evolution of the brands that we have had for literally years if not decades, and exposing them to consumers who are cutting the cord or never had a cord, so there’s a net-new audience of the services. I think that’s a little bit of a difference in how we do that and marketing franchises that have been around for so long vs. marketing originals.”

Helping Discovery crack the digital code is also part of Spagnolett’s secret sauce as a marketer, having worked in senior digital marketing roles across the full spectrum prior to joining Hulu, including as CMO of advertising software company SteelHouse (now known as MNTN), Head of Digital at Farmers Insurance and 11 years with Yahoo, most recently as VP - Global Marketing Services. 

Over the summer, Spagnoletto introduced the first global marketing campaign for Discovery+, dubbed “The Streaming Home Of…,” which showcased all the different lifestyle categories its content encompasses from content brands like Food Network, HGTV, Discovery Channel, TLC and the newly launched Magnolia Network. 

 

Though the campaign was cross-promoted heavily across Discovery’s owned and operated channels, Spagnoletto also invested in a robust mix of off-channel media too, from TV and out-of-home to digital and social. “No media plan is the same, depending on the content that we’re promoting or the brand,” he says. “Discovery has really put its money where its mouth is from a marketing perspective with the service, which allows us to be on multiple platforms and learn from those and optimize our way through it.”

Also coming up on Spagnoletto’s plate is the forthcoming merger of WarnerMedia and Discovery, which is expected to close in the first half of 2022. Unclear is what, if any, impact the merger will have on the operations of Discovery+ and HBO Max, WarnerMedia’s 1-year-old streaming service that reported a combined 67 million subscribers with HBO in July. Spagnoletto says simply of the forthcoming plans: “I could tell you at the highest level obviously we’re all excited about the prospect of it, but right now it’s heads down on Discovery.”

Brand Innovators caught up with Spagnoletto from his home office in Los Angeles to learn more about his first six months on the job, the TV-subscription trends (including “cord-nevers”) that have contributed to Discovery+’s rapid growth and audience learnings from the first streaming version of Discovery’s programming franchise “Shark Week.” The conversation has been edited for length and clarity.

Brand Innovators: You joined Discovery in March just two months after the debut of Discovery+. What was the onboarding like, given you joined mid-launch, and what were some of the first initiatives or campaigns you got off the ground?

Pato Spagnoletto: The service really had a strong reception from the market in the first few months. And I would say that my time continues to be fairly equally split between external initiatives and internal ones. On the internal side, as you can imagine, it’s been about bringing the teams together with a handful of other great leaders across the company to create this function and learning how to work as a team with other groups -- whether it be the networks or other regions and really figure out the core KPIs. And our success as a group has been a general priority of ours, not the least of which has been hiring incredible talent to add to the incredible team the company already has. 

And on the external front, it was about continuing to add more fuel to the fire, and there’s more than a few ways in which we’re doing that. One is we launched the first global marketing campaign, which we called “The Streaming Home Of…” It was really around putting our stake in the ground and claiming leadership in key categories around everything from true crime to relationships to paranormal, and tailoring that by market. So the way we executed in the U.S. was different than the way we executed in the UK or Italy, but the first campaign that rolled out globally. We’ve had so many great content launches — over the summer we had “Shark Week” in the U.S., and the Olympics in EMEA, so a lot of those things have been really fun to be a part of with the team and thankfully to a really strong reception from our audience.

Discovery+ recently announced it reached 18 million paying subscribers in its first seven months. What factors do you think have contributed to Discovery+’s initial traction with subscribers - has competitive pricing played a part?

I think if you take price and content together, to me that spells out value exchange. And whether it's the $4.99 ad-supported tier, or $6.99 ad-free, the value exchange is extremely strong. We have 55,000-plus episodes in the U.S. alone, which is an extremely deep library compared to other services like Disney + or HBO Max. The library is very deep and also very engaging. When we talk about value, and we look at how much consumers are spending on our service, they’re getting a great value.

But we’re not cheap. If you look at us compared to Paramount Plus or Peacock, or how a lot of services are promoting their “year free”s through Apple and all these partnerships, I’m sure if you looked at a weighted price, we’re probably right in the middle if not a little higher.

What types of audiences have you identified as the sweet spot for Discovery+ thus far, and where do you see the biggest opportunities for growth?

We’re seeing a really interesting trend in that, ballpark half of the audience that’s coming to Discovery+ are cord-plusers who want the full library or looking for an ad-free experience or looking for content conveniently vs scheduled times. But it’s very complementary to what they're seeing on linear, whereas the other half are cord-cutters or cord-nevers, so we need net-new content for that audience. 

For us, the priority isn’t trying to accelerate cord-cutting, because that audience by and large is finding the content they need with what they have, the white space is the cord-cutters and cord-nevers, so how do we reintroduce or introduce them for the first time to our incredibly well-known franchises, from “Property Brothers” to “Fixer Upper” to “Shark Week.”

Earlier this year, Discovery+ streamed major franchises like “Shark Week” and The Olympics (in Europe). What did you learn from the audience engagement and marketing funnel for both of those tentpoles, and how might some of those learnings be applied to your “Ghostober” franchise this month?

Two big learnings. One, it was more successful than we thought it would be. On the first day of “Shark Week” we logged in, I looked at our numbers and I thought there was an issue with our reporting because of how good our numbers were. And this is not me tooting our own horn, the reason I say that is because in terms of planning from a media standpoint, we could have put more media behind it in a very efficient way, we could have leaned into it from the beginning. The second learning was the breadth of content meant that we promoted a lot of it, but what we found out was it’s not as necessary to promote every single individual title as much as it is to promote “Shark Week” and within that feature one or two titles. We may have had more creative out in the market than we needed, so the learning was to focus on two or three things to go really deep in the market.

So with “Ghostober,” similar to “Shark Week,” it’s going be a blend of content that is new and original to Discovery+ plus content that is new and concurrent with our linear networks, and also some of the best hits of our paranormal library and others all packaged together. The hub itself has just launched on the service, which is another learning that it works best when you merchandise it as a single hub.

Discovery+ also has a buzzy documentary title coming this month with “Introducing, Selma Blair,” which details the actress’ diagnosis with multiple sclerosis and got rave reviews on the festival circuit earlier this year. What will your launch campaign look like for that? 

We’re really excited about that title, it is such an important story to tell and such a personal story that I think it just carries weight beyond a value to subscribers. It’s something we think is important for the world to hear. It’s just beautifully done, and with that in mind this is one where we’re gonna put quite a bit of media weight behind it. When we think about a go-to-market plan for any big title, it’s not just media, it’s publicity, it’s social, it’s CRM. And the beauty of having as big of a panel as we do is you get the people whose butts are already in the seat. And from a creative perspective, it's really honing in on the humanity of the story. 

Tell me about your new global campaign “The Streaming Home Of…” – what inspired that, and how will it be adapted globally?

When Discovery+ first launched, we launched with a message that was around value — meaning not just price, but great content for a low price. And that did a phenomenal job for the first three to four months. We needed to evolve around three key parameters that are very important for any campaign to succeed – unique, relevant and impactful. And a value message in and of itself cannot satisfy all three. When we looked at our content, it’s pretty simple to see how unique our content is, how do we bring that back home, in a way that is both relevant and impactful was the genesis of “The Streaming Home Of…” campaign. With the fill in the blank, it allowed us to lean heavily into categories like “The Streaming Home Of... food, family, et cetera.” Whether we use those words or use creative words like “Yikes” or “Yum,” it was a good way to break through from an ad recall perspective, but still do it in a voice that was very unique to us. 

We did a lot of work around refreshing our brand positioning, and while we never used these words outside of our walls, what it boils down to is Discovery Plus is a service that is truly full of life in every sense of the word. We celebrate and tell the stories that are real, we take ourselves seriously when we need to but we also know our place in the world and we thought the launch of “The Streaming Home Of…” campaign encapsulated all these pieces. In Europe, for example, we were able to manage a little bit of the campaigns we had for the Olympics, it was just a great tie-in so you could see the streaming home of X and so much more. So when we look at the metrics and it's not just about subscribers, our brand campaigns are really measured around awareness and recall and message breakthrough and across all three we're definitely seeing those metrics move in the right direction. A brand was never built in six months, ours won’t be either. We still have a lot to do, but we feel pretty good about the direction we’re moving in.

What are some efforts Discovery has championed this year to advance its diversity, equity & inclusion efforts, and how have those manifested in your marketing?

I can talk very passionately about the parts that we're doing within marketing. At the corporate level, with the help of the FDIC and partners like Microsoft and Trust Financial Corporation, we launched a mission-driven bank fund designed to provide financial services to minorities, specifically people of color. And that combined commitment is $120 million, which is truly amazing for what we do as a company. That’s on the heels of what we do with a program called “RISE” as a more global commitment to reducing inequality, and there are multiple tentacles there, as well our partnership with No Kid Hungry which recently announced 1 billion meals delivered to children and families in need since 2019. 

At the marketing level, the things we’re taking very seriously are one, within the team -- what do our hiring or promoting practices look like? How do we make sure that we are being truly honest about our diversity and inclusion, not just one or the other in terms of the voices. So it’s not just ethnicity or socioeconomics, it’s literally just having a representative sample of what makes up our market. We’re also making sure that we reflect that in our talent, if you think about it in front of the camera or behind the camera in our creative development, that is something that we in marketing can own and be held accountable to at the individual and corporate level. And it's one of the things that makes me feel really proud of being what I call “amicable discoverers.” And we do that globally. If you look at our creative development in the Philippines or some of the other markets where we’re getting ready to launch, that is a key priority for us to continue to do.

Given how much media habits have changed over the past 18 months, what’s an emerging consumer behavior that you think will be here to stay even as we start to get back to in-person life at scale?

The obvious part is that cord-cutting will continue, who knows at what rate and when there’s going to be a tipping point. And that tipping point will be coming not just for consumers but in how content is distributed. But the big, exciting question for the industry at large is how will content be distributed between theatrical, streaming, linear, on-demand, what is the windowing strategy and most importantly now that you’ve given the consumer a direct voice in this choice, what will they vote for? I think we’ve seen Warner and Disney test and experiment with different windowing or lack thereof for theatrical to streaming, and I think the jury's still out. For the first time, consumers are voting with their wallets directly on what they prefer. 

So now the balance will be on how do you satisfy consumer needs but also run a business where you can maximize deals? A lot of this content is not cheap to produce, so you want to make sure you take multiple bites of the apple in ways that are still satisfying to consumers and what they want. So that’s the next big frontier for all of us in the industry, is in this world where it’s almost a wild west of what goes where and for how long, and to do it in a way that we’re not re-creating massive headaches for consumers where they’re saying “Hey, this bundle didn’t work for me, so let’s not do it again.”


Andrew Hampp is an entertainment marketing consultant for Brand Innovators and the founder of consultancy 1803 LLC, based in Berkeley, California.

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