Executive Viewpoint: Steve Ellis, Paramount
Matt Bartels, principal at the Alexander Group, spoke with Steve Ellis, Chief Operating Officer, Paramount. Steve shares his thoughts on the industry, economy and the truth about what organizations need to do to thrive.
Matt Bartels: Welcome to Media Sales Confidential, where we have the pleasure of speaking with the world’s most innovative and respected leaders. I’m Matt Bartels and today, we have the pleasure of speaking with Mr. Steve Ellis. Steve. Welcome.
Steve Ellis: Thank you for having me.
Matt Bartels: You have had the proven track record as a strategist and an entrepreneur. You founded two organizations and now, you’re leading a transformation with one of the world’s most iconic and large media conglomerates. How did you get into this space?
Steve Ellis: All right. Well, if we’re going to do the bio of Steve Ellis to start with, I’m happy to share it with you. It is a long and tortured story, comical in its nature. And I credit America with the story, of course, as everyone should. I came to America originally because I was accepted to Wharton as an undergrad. It was a secret way for me to get to America. I always wanted to come to America because I loved John Ford Westerns because my father brainwashed me into watching them. And I loved Bob Dylan. So I was like “I got to get to America”, because by that point I was a musician. So my cunning plan was to persuade my father that if I went to university in America, I wasn’t a complete ne’er do well, this would be a good idea. So I applied to a bunch of American colleges, all the fancy ones, most of whom rejected me. But Wharton accepted me as an undergrad. I think it was because I was the first English Jewish person that had ever applied to Wharton, so I filled some kind of quota for them. This is ’88, so I ended up in America taking an economics degree at Wharton and living in Philadelphia, which explains my sports fandom being all Philadelphia to this day. But I spent ten or 15 years really pre and post-that as a musician. Not a very good one.
Steve Ellis: Terrible record deals, independent label, and then a very brief sojourn with the Columbia Records Company in the mid-nineties when English rock bands were selling records and they thought they might confuse me for one of those. But once that deal fell apart, I had read the contract that I signed with Columbia Records, and I remember the lawyer at the time saying to me they’d never had an artist read the contract. And when I read it, I was like, “Wow, this is terrible.” I sort of understood it completely and it led to the business side-the first business I started, which was a music licensing company. I was living in New York at that time, what they now call the Hudson Valley. We used to call it upstate New York, but it’s the Hudson Valley now, and started a little company up there with no plans other than to place the music of unsigned musicians like myself into TV shows and commercials. Long story short, I sort of turned it into a catalog of people like myself. We were fair to the musicians. If we rented their music to shows, they made money. We made money. If we didn’t, they owned all their rights and maintained all their controls. It grew very quickly and it was bought by Getty Images and [it] never was in my plan to do anything like that. I just was hoping to be able to afford to pay for my children.
Steve Ellis: And along the way, again by total accident, I raised money from a fabulous venture capitalist, the legend in the industry, Alan Patricof. There wasn’t a lot of venture capital in New York in 2006, especially for companies based two hours north of New York City. But it was just a great, lucky circumstance. We all got to work together and get-he was a great acquirer of the business and it was a music licensing sort of parallel to their image business. I rolled right out of that to starting another company because that’s what crazy people do-[Yeah]-and started a company called WhoSay, which I moved to Los Angeles. It was originally meant to be a media company for celebrities. That-ten years ago, ten or 11 years ago, People magazine still did $1,000,000,000 in revenue in print. So the idea was “Social media is going to grow. It was still early,[so] we’ll leverage the growth of talent in social media, drive people to media destinations and share the revenue with talent.” That model ultimately didn’t work for a variety of reasons-Facebook and other things that we won’t get into in detail, but we pivoted. The company [that] wants the clients that we were talking with about advertising said “Well, you know, Steve, we’re not really that interested in another place to run ads, but we’d love for you to help us with talents and campaigns,” which sounded very complicated and human and creative, which wasn’t necessarily my intention, but they were willing to pay for it.
Steve Ellis: So we essentially constructed the model that has become what now litters the feeds of so many social media users, influencer marketing, and we productize that essentially with a series of accidents. I’ve told the story before, but I sat next to someone at dinner who explained to me that if you really want this idea of campaigns and talent and distribution bundle together, you have to put a CPM on it because media agencies can’t buy anything unless there’s CPM on it. Yeah, and that was the key. I mean, I just went back to the office and said, “Right, we’re bundling this together and calling it $20 CPM”. And it started to work really well, you know, in 2018-19, the CEO of Viacom, who was still the CEO, of course, of Paramount, Bob Bakish, and the then CFO, Wei Davis, came to me and said “We’d like to buy the company,” and that’s what happened. So that’s how I ended up going from 20 years of startups and two startups to being inside, for the first time ever, an actual corporation undergoing mergers and transformation. Stuff I never would have envisaged was in my cards. But then, I never envisaged any of this would be in my cards. I didn’t exactly have a plan, as you can tell. So that’s how I end up here.
Matt Bartels: So CEO and founder of two startups. You’re doing everything, right? Yes. You-how many hats did you wear?
Steve Ellis: Oh, me. All inning. You literally-well, actually, I’m actually a pretty good salesperson too. So like, you know, I hit all of them.
Matt Bartels: Yeah. So then you move into Viacom, right? Yes. Which is not Paramount. Yeah. That’s a heck of a transition. Yeah. Going from being the boss of everything to now you’re in this huge [organization] and you’re going to have to navigate all the personalities and the leaders. How did that transition unfold?
Steve Ellis: Well, I just think of-we’ve talked about this. I think I think I’ve just been extremely lucky. I first want to say like, you have to credit, genuinely credit the CEO and say, “Well, most people would not think of bringing a lunatic like me into an organization and saying, ‘Well, this person might actually be able to help us do and transform some of these elements'”. So, you know, Bob was willing to take that risk and take that chance. And for me, it was so different and such a learning experience. It just worked for both of us to say “You know, this is going to help us”. I also, I think, having gone through an acquisition before, I’d learned a lot through that process. And so when they asked me to take over the ad strategy, which was the first sort of job with the head of sales, and then our now head of sales is John Howley. He was there at Viacom at the time. You know, we were able to just get together and say “How are we going to build a digital business?” You know because that was the challenge at the time: how to sort of help a company transition to being less dependent on the linear assets that obviously have been an amazing business for so many years.
Steve Ellis: And then of course, as soon as we started to get that under control, we merged with CBS. Yeah, yeah. And then and then, you know, Bob and John asked me again, like, “Would you stay and, you know, and do the same thing again?” And COVID came along and, you know, next thing I know, you know, we’d merged and I’m working for the legendary Joanne Ross. We’d met twice and then COVID happened and we built this relationship together over a couple of years where we really barely got to see each other in the flesh ever for almost 18 months. It’s a very unusual set of circumstances. But I think the key to the answer to your actual question is between Bob and Wade and then Joanne and John and Naveen. Now our new CFO Will-not new anymore, but the current CFO, of course, at Paramount-they’re just, we’ve just been very lucky. They’re a great group of people who’ve been willing to tolerate my impetuousness and desire to change things, hopefully for the better. So I just-it’s been very lucky in that.
Matt Bartels: So you’re voluntarily signing up to go into the hornet’s nest here over and over and over again?
Steve Ellis: Well, I mean, I’d like to just credit my wife in this process a little bit. She likes to say that I prefer corporate Steve to start-up Steve. That’s what they call me in my family. They call me corporate Steve, which I think is an insult in my family, just to be clear. But they-my wife likes to say, you know, the corporate Steve is much more pleasant than start-up. Steve, you know, not as crazy. Yeah. I said, okay. So we agreed after all the second company that we would do what she thought was best for the next 20 years. So, so far I’m sticking to it.
Matt Bartels: Nice. Nice. You’re still working. Okay, so right now we’re in the midst of truly dynamic times in the marketplace. We’ve got-we’re grappling with the potential of a downturn in advertising spend in general. We’ve got the stock market [which] is roiling. What is your take right now and what’s happening in the market?
Steve Ellis: Well, look, I think it’s no secret to say it’s a pretty tough ad market. You know, I think Zaslav is talking about it this week. Everyone’s been out talking about it and it definitely is. What I would say is these things are always temporary. They are there are varying degrees of cyclical nature to this stuff. I don’t even remain slightly worried that it’s not going to return in some form or another because it does. America is an amazing and, you know, a country that way. There’s just so much natural momentum inside of the country and the machinery is so well established that-and it works so well that it will come back. And I have a feeling, you know, it’ll come back within a manageable amount of time. And we feel pretty good about where we sit because we acquired Pluto prior to the merger with CBS. We’ve sort of been able to combine that with the launch of Paramount Plus and the ad-supported tier and our relationships with MVPDs. And we have a very, very large ad-supported streaming business. So while we still have the iconic broadcast channels and the cable channels, we have now this very large growing footprint of ad-supported streaming video. And that’s really been the balance that we need to create and look for. And so we have that. And when the ad market starts to come back, we feel very, very well positioned to be and continue to be leading that streaming ad-supported business.
Steve Ellis: So obviously, Hulu has been in that space for a long time and we’ve pulled this stuff together and created what we call IQ, which is the streaming bundle of these assets. You know, really only a year ago. But we’ve created a set of genre tiers as the way to buy IQ so it translates to the TV buyer smoothly. We still have the power of the upfront, which is, you know, just a magnificent and critical way to drive momentum in the business. And you know, we have great at the moment great hit shows like Yellowstone and actually, the pretty enjoyable new Sylvester Stallone show came out this week. And, you know, the NFL and everything in between. So I think it’ll be tough for a while. No question. But I think the market itself is there. Everyone’s bought into ad-supported streaming. Sure. Everyone knows it’s a television equivalent. There are things, of course, that we will constantly improve in the space, but generally speaking, it’s still a good business and there’s still growth in that space and demand for it because premium video is different. It’s my fundamental belief that premium video non-skippable ads, formats that have been proven for 50 years, is a different video ad experience than short form UGC, pre and mid roles that are watched on a mobile device more than on a big screen. And I think our clients feel the same way.
Matt Bartels: So still thinking long-term big picture stuff, but we’re looking in the eyes right now of a challenging next year. I think so. So balancing short-term versus long-term strategic priorities from a transformational perspective, what are the major priorities for your transformation? So not only is Paramount going through some go-to-market transformations, almost everybody else in the industry is as well. What are the priorities in the short term going into this year as you’re trying to move the organization this large in a different direction?
Steve Ellis: Yeah, well, as you know, you guys have been helping us with preparing for the kind of transformation we were planning on for the ad sales organization, which we’ve just very recently reorganized that ad sales department. John Howley is now the president of ad Sales, and we’ve organized our teams, reorganized our teams into whole coat structures, which is such a key part of our business servicing clients and the holding companies that represent them. So that is the immediate focus. We’ve literally just performed this reorganization. The teams are settling into that process and we will make sure we land that effectively because the North Star for all of these transformations really in an industry like ours is being an excellent partner. You’ve got to be extremely easy to work with. You’ve got to be a solutions provider. You know, it’s more challenging than ever to be a marketer in the world today. You have to do a bit of everything. You can’t just buy television and not do influencer marketing. You can’t just buy streaming and not combine it with performance. If you really want to be effective, you get to do everything.
Matt Bartels: It’s an ad strategy, right? There’s no wars.
Steve Ellis: Absolutely, and I think that we’ve bought and buying WhoSay , buying Pluto [and] building these streaming packages-we believe in our key offering premium video reach. That’s what we provide: broadcast, cable streaming. We have it, and formats that are proven, as we talked about. And then we have two other products in Paramount advertising, advanced advertising, which basically provides targeting option, and we have easily the most advanced version of that in the linear business and creative. And those two products are about effectiveness. So come to us for the video reach, the premium video reach, which, you know, works in formats, you know, works. And we can offer you in addition to products that can make that buy more effective. That’s it. That simple story now needs to be mapped by our structure and how we go to market to service our clients. Because, you know, post-mergers, you guys have witnessed these before. It’s always a little more complicated and a little more confusing. So that’s the near term for us is landing that change and making sure our place is dynamic, easy to work with and work for. And the dust settles on an organization that can really look forward. We’ve been preparing for this for a long time, so I’m both proud that we’ve been able to get it done because it’s not easy, you know, working with you guys, We’ve done a lot of work. I’m sure we’ll talk about some details, but once we get that, the measure of success will obviously be revenue. It will also be clients saying to me “Steve, thank heavens, you know, this is just-it’s a much smoother process working with you.”
Matt Bartels: So a lot going on in the short term, bigger picture thinking. So we know that enduring organizations have four fundamental tenets: one, clarity of mission, strong culture, talent and people focus and then getting all of the operational things taken care of. Let’s focus in on the people right now. What are the things that you’re thinking about for 2023, 2024, 2025? People strategy isn’t a one-year strategy. It’s got to be something that’s much bigger than that. How are you prioritizing people in the transformation?
Steve Ellis: Yeah, so it’s a key question everyone talks about. We’ve been talking about it here and easy to talk about, hard to solve for. So let’s just talk about advertising sales in real terms. Advertising sales historically in the US is in New York, Chicago, Los Angeles business. It’s tended to be, you know, not very diverse and sort of I like to say it’s sort of been very white and very golf. There’s a lot of golf conversations going around. That’s not reflective of America that we serve with audiences and content. You know, specifically at Paramount, we believe we produce the most diverse slate of content representing the most diverse set of cultures and lifestyles of any media company. I think that’s totally defensively true. You know, whether it’s from BET, whether it’s the NFL, whether it’s Yellowstone, whether it’s RuPaul. We really do put together a broad slate of content for a broad slate of audiences. Ad sales has to reflect that same thing in both the teams that we put in front of our customers and also the way we go to market and the things we go to market with. So diversity is a problem for everyone, and that’s a key factor that I’ve taken on in the strategy role that we’ve had is how do we address that? And we’ve had some-we’ve started programs there as we’ll talk about, I’m sure, at the entry-level that have been very successful, but it’s required significant change in process.
Steve Ellis: We had to look deep into what we were doing, how we were doing it and how to change it. So we launched something about a year ago called the Sales Associate Program. We look at the organization and looked at the entry-level position, which had a different title at the time. There was incredibly high churn at this position. It was something that we hired almost 100 people a year into this entry-level position, and a vast majority of them within 14 or 15 months, would either go work for someone else for much more money or we’ll be burnt out of what was essentially a heavily entry-level administrative role. So we rewrote this entry-level role entirely into the sales associate program. We looked at how much was being paid for this role and it was the amount that was being paid was basically barely survival wages in New York City or Los Angeles. So inherently you had a bias to some degree there where the only people that could afford to take that job [were] people whose dad was helping them pay their rent. And then we looked at the way the hiring process went on and the requirements we had for this job. We had GPA requirements, we had course requirements. And as I jokingly said to Joanne, I said “Boy, if these GPA requirements were in here, you and I might not make the cut. Certainly not me anyway.”
Steve Ellis: So we said “These requirements, who put them in?”, you know, and the answer is nobody knows. Like, who knows how many years they’d been there? So we just got rid of all of that. We said, “Right, the requirements are, you know, [an] associate’s degree. We will then put in place an entirely new interview process.” And so we hired a behavioral science company called Pi Metrics, which basically built our trade analysis for the role using existing employees that we think have been successful at the role. And that trait analysis needs constant iteration. Don’t get me wrong, it doesn’t start perfectly, but that’s the beginning of the interview process now for the Sales Associate program, and we go out and recruit constantly with cohorts. That’s another big change. So twice a year we recruit 30, 40, 50 people at a time into these roles, very specifically telling them this job is now a chance to learn the whole media industry. So we’re in a competitive space against Facebook and, you know, NBC’s and everyone involved in media, we say to them, “Look, you go to those places, you’ll learn one thing. You come here, we will teach you in 18 months, television, cable, broadcast streaming, social media, influencer marketing, and then it’ll be beholden to us to ensure that we can keep you and progress you through the organization”. So we’ve just made it a much more compelling job.
Matt Bartels: Yeah.
Steve Ellis: Paid much, much better. We made [a] significant- almost doubled the pay- and put this biometrics behavioral science filter in essentially the beginning so we would find the right traits in people and remove a lot of the inherent bias that says, Well, if you didn’t go to this college, you can’t be right for this job. And if you don’t present this certain way, you can’t be right for this job”. And I think a lot of that in all the industries we’ve talked about this week, you know, people are like, “Well, you can’t work in this industry if you didn’t already work in it,” and certainly in sales, I don’t believe that to be true. So good salespeople can sell anything and you don’t need to have worked at a media company to come and work at our company to be in media either. So that program has now hired over 100 people in a year, and we’ve been able to change the diversity metrics, you know. Improving the diversity metrics by over 200% to 240%.
Matt Bartels: Very impressive. Congratulations.
Steve Ellis: Yeah, I mean, it’s early days, but so far so good. And it just shows that if you go into the guts of the process in a large organization, you can change things, but if you don’t change the process, it will just go back to what it was before. No matter how good the intentions are.
Matt Bartels: Yeah.
Steve Ellis: So I think that’s something that the team at Paramount in HR and the talent team and the strategy team have worked on. And I think I can speak for all of us and say it’s probably the most impactful thing any of us have ever done anywhere, and we’re super proud of it. So people changing the nature of people through the years and it’s a unique situation in our department because there’s so many people at that level. But we believe that within four or five years, these people can filter through the organization and change the entire look and feel of the department. Yeah. It’s also, by the way, saved us a ton of money because we’ve had almost no attrition, three or four people over the course of the year. So a lot less time spent on recruiting to replace people [and there’s] a lot of that time spent on that process of replacement. Sure. So when you get these processes right, they’re efficient in all ways.
Matt Bartels: Yeah. So your associates must be pretty hot.
Steve Ellis: Yes. Well, now that you’ve got me to the market, I’m on camera now. So everyone’s going to be looking [me] up on LinkedIn.
Matt Bartels: [Laughs] Thank you. Thank you. We appreciate it. Yeah, well, that’s very-that is [an] incredible story. I like the comment about everybody has good intentions. Everybody has good intentions, right? Everybody can say “Yes, that’s a good thing. We should do that.” How were you able to go from good intentions to actually tangible process changes that aren’t just an idea that actually lead to the results that you’re seeing?
Steve Ellis: Yeah, well, I want to say, first of all, I read a lot of history. So, you know, there there’s a great- there’s always the difference between the marketing and the execution. And, you know, Lyndon Johnson is the president who passed almost all the laws that impacted civil rights in America. I don’t think half of the people would even know that or necessarily even know him, because you ultimately have to be able to manage the process to the outcome if you want things to change. And so I take some, you know, learning from that example and saying “Well, I knew we had to change fundamentally: the way we went to market, the way we spoke about it and the way we processed it.” I also want to say that I’m just fortunate in the sense that like I have the air cover inside a large organization to make these changes. I’m sure it’s much, much more difficult or organizations that are even in a different products stage of their lifecycle or who, you know, just haven’t got that same moment in time to make the make the change. But I just had that remit and I was able to say “Okay,” and I do this a lot, I’ve got to be honest with you inside of Paramount, like “You don’t report to me, but here’s what we’re doing.”
Steve Ellis: You know, and I think probably it just goes back to the fact that you know, I’m not very well trained for corporate, that I don’t let that stuff necessarily be a full hindrance. If we actually want things to change, we have to be willing to kind of cross over those lines a little bit and pull it together. And when you do that, I think going back to your broader point about people, I mean, people want to be involved in impactful things, whether it’s sales, whether it’s getting greater client success or greater client love or altering, you know, the hiring process to actually make sure we improve and reflect the country more effectively. And at the end of the day, like I say, we put out shows that reflect the country in a broader way. Our department is key for bringing in billions of dollars in ad revenue that represent those shows. We ought to look more like America when we’re talking to our clients if they’re going to believe we know how to talk to America, probably love it.
Matt Bartels: Absolutely love it. So tell me, you got some great shows. Tell me, how do you leverage those shows within the organization to help build culture?
Steve Ellis: Well, you know, it is I would just I was just talking to somebody here today at your conference in behavioral science and some other areas. And I said, “Well, we have the benefit of at least looking sexy. We could be like ‘NFL, you know, let’s talk about that. What part of this?’ So it does provide a sort of the sex appeal of entertainment and sports where we have such a strong slate of content to be appealing inside the organization. But I do think something came up in our conversations today as well, which is we need to do a better job and we will, of providing people who come into the organization, perhaps through the sales channel, of being able to move laterally across the organization, because we do have very compelling places to be impactful. You know, there’s a news organization that, in my opinion, is one of the few left anywhere on earth that actually runs the facts straight down the center. We have incredible sports properties, entertainment properties. So if you come in as an ad salesperson and you’re a young person, you might wake up one day and say”Actually, I think I’d like to be in a creative line of work or I’d like to be in content or production or marketing of the content.” So we need to do a better job of making those lateral opportunities available and some of that is just communication. Sure. And again, like mergers and departments and silos, trying to make sure that the communication about opportunity is more lateral is the best way for us to leverage what we have as a fairly sexy bunch of assets to think about how we could make it more appealing to people if they find that ad sales isn’t for them and vice versa. There might be people somewhere else in the org, like “Actually, Ad sales might be something interesting to me because I have those chops.” I like to say, if you really were filtering for ad salespeople, bartending would probably be the most important requirement. Certainly I speak to myself.
Matt Bartels: Yeah, no, career mobility is a huge opportunity, I think, for most organizations, especially given the changes of their consumers, which are the people that are going to be leading the organizations going forward. I know that’s a big priority. And when we look at the skill sets that you’re looking at, you’re looking for complementary skill sets. There isn’t necessarily a typecast anymore, right? So if you’re good at math or good at analytics or good at being consultative, you can be good at that in multiple areas within the organization you can.
Steve Ellis: I also think sales, certainly in my version of sales, it’s not-and there are plenty of industries where perhaps it’s still true that a bang bang seller is just a bang bang seller. But I think today and probably all walks of life and certainly in ours, our salespeople have to be, you know, solution providers, collaborative, consultative. It’s not just “Here’s what I got, here’s what I got, here’s what I got.” It’s got to be like “What do you need from me to help solve your problem?” And that’s why I’ve always said to people I work with them for like “Why do people give you money? They give you money to solve a problem they’re not giving you for fun. Like, let’s solve this problem.” For me, that’s the exchange of value. So you’re taking on their difficulties and their miseries or whatever it is that you need to solve for them. That attitude is something we have to build more into the 360 nature of the modern seller, I think for everyone. But in marketing, like we said earlier, for sure, because it’s not one thing anymore that will solve your marketing problems. Audiences are everywhere in different places. All the time. Everybody knows this already, so you know, you want it to be simple, but it’s not anymore. Yeah.
Matt Bartels: Well, one of the things we like to do here is talk about leadership mantra, and at the end of all of our podcasts, we say, What is your leadership mantra?
Steve Ellis: Christ, I’m far too verbose to come up with a mantra.
Matt Bartels: Steve Ellis, what is your leadership mantra?
Steve Ellis: Oh, God. Oh, you put me on the spot here, right? You know, I just think that ultimately, if you want organizations to be successful in my experience and again, I want to be clear and say I built a couple of companies with 100 plus people at them, and I’m now part of a 10,000 plus people organization and an ad department that’s over 1,000 people. So, my experience is different and varied in the modern version of the world, but I’ve always found it true. People want honesty at work in the spirit of the place.
Matt Bartels: Yeah.
Steve Ellis: And we do a lot of marketing inherently to employees in the culture that we live in. I think today amongst younger people in particular, they want to know that you’re being honest about the problem, about the solution, about its difficulty. And so I’ve always been successful by being, I feel, by being honest with the people I work with and saying, “Right, this is going to be really, really hard or this is going to be really, really fun or there’s going to be really, really difficult.” And I think that people get up in the morning for that more than they do for fantasy. So I think like, the key to being an effective leader in company America of varying sizes is saying to people like, This is what we have to do and it’s going to be very hard, but we’re going to laugh as much as humanly possible while we’re doing it.” You know, it’s not a mantra. Like I said, I’m far too verbose for a mantra to put it on a slide for you. But that’s the key, I think, to getting people to want to come to work and work together. And then you try and encourage them to be honest with each other because then people can come to work and be themselves. Yeah, you know, they have to pretend to be somebody else. And I think that’s the most empowering thing that I found with all the incredible teams that I’ve built in these small companies. Yeah, I’m super proud of the teams we built in those places. I’m sad we sold the companies for that reason alone.
Matt Bartels: Yeah.
Steve Ellis: And increasingly similarly, we now are, you know, continuing to merge these teams together and build that culture at Paramount in the ad sales department where people know what the challenges are. They take them on and knowing they’re easy or hard and we try and do it with as big a laugh as possible along the way. That’s the best I can come up with.
Matt Bartels: Well, thank you very much, Steve Ellis. Thank you.