CMO Spotlight: Discovery’s Patrizio Spagnoletto knows how to drive subscriber growth
It’s a “critical piece of the puzzle, but not the whole story,” he says.
As a teenager growing up in Italy, Patrizio “Pato” Spagnoletto was first enamored of American culture thanks to the hit TV shows of the eighties — Alf, Full House, The A-Team, and Magnum P.I. (the original with Tom Selleck). “We all consider them to be so cheesy now, but it made you think, Oh my God, the States! That place is amazing. I have to make it out there,” he recalls.
Spagnoletto did make it out to the U.S. and has called the country home for the last 30 years. “I’m Italian by blood and American by address,” he says. What’s more, his early love of American TV has come full circle. Based in Los Angeles, he has achieved recognition as a marketing leader for helping U.S. streaming platforms turbocharge subscriber growth. In February 2021, after a four-year stint at Hulu, he became the Global Chief Marketing Officer of direct-to-consumer for Discovery Inc., a leader in unscripted entertainment channels including its eponymous flagship channel (the home of “Shark Week”), and sister channels like Animal Planet, Food Network, and HGTV.
After a year in the role of chief marketer, Spagnoletto has a vantage point like few others. He’s at the heart of an industry that’s scaling and growing at a remarkable rate. With an eye on both global and local markets, he can offer key strategic insights into the “streaming wars,” how to position a popular brand, minimize churn, and drive viewership during a time when there’s a red-hot battle for a viewer’s attention. “It’s an exhilarating time for media,” he says. Despite all this, he seems relaxed about his remit.
So far so good. Discovery’s streaming portfolio — led by Discovery Plus — has garnered 20 million paying subscribers, almost double the number since the service launched in January 2021, according to the company’s latest figures. While that kind of growth is a critical piece of the puzzle, it’s not the whole story, says Spagnoletto. “There’s a second piece to that metric, which is ARPU, or average revenue per user, because it’s the combination of the two that really gives you a signal into the health of the business,” he says.
Spagnoletto explains that ARPU is not just subscriber revenue, but also its ad revenue. “Companies like Discovery and others who were born in the linear world are now all starting to figure out how to balance revenue that was primarily from ad sales or distribution fees into the streaming world,” he continues. “Our ad-supported product — that we keep rolling out in different markets — gives us an opportunity to reach a different segment and a different audience and monetize them in a way that’s as good for us as it is for the advertising community.”
Spagnoletto refined his approach to building audiences at Hulu, where he tripled subscribers during his four-year tenure at the Disney-owned platform. He offers three lessons from those years. “You can’t buy your way into growth with paid media,” he says. “You have to be able to think about channels and partnerships like Hulu created with Sprint and then Spotify [both of which launched in 2017].” Secondly, he continues, pricing and promotions are not dirty words when you’re deliberate and specific in your offers. For instance, “Hulu was the first streaming service that came out aggressively with a Black Friday offer in 2018,” he says. “There was a ton of nervousness going into that, but we learned a lot.” And third: “The most sustainable way to grow the business is to reduce your churn.”
The “churn piece,” Spagnoletto says, is one that’s a priority for him at Discovery, which has one of the deepest libraries of content around. “We all put a ton of money and spotlights against new brand campaigns and new content, which serve their purpose for bringing people into the fold,” he says. “But then shame on us if we don’t do the right job getting them exposed to everything else that’s on the platform because then there’s no need for a subscription service. Then it’s just pay-per-view.”
Last year, on his watch, the company launched its inaugural global campaign with the tag line “The Streaming Home Of…,” part of a global strategy to gather Discovery’s predominantly nonfiction portfolio under one umbrella, what Spagnoletto calls “human-powered stories.” The campaign is modular by design and focuses on genre (rather than new releases) — whether food, lifestyle, or the paranormal — and is flexible enough to highlight trends that appeal in different international markets. Discovery continues to expand its worldwide presence, launching in the Philippines, Brazil, and Canada in 2021 with more coming online this year.
The company’s library — and commercial inventory — could significantly expand if the Discovery and WarnerMedia merger is approved later this year. It would — according to Discovery’s CEO David M. Zaslav — boost the company’s global total addressable market to be on par with the world’s biggest streaming service. In any event, when it comes to attracting audiences, the stakes are only getting higher. The goal, says Spagnoletto, is to encourage an emotional attachment to the brand so that when a viewer turns on the TV, they’ll choose Discovery. He calls it a probability game. “Our role [as marketers] is to increase that probability to a higher percentage than our competitors that you will find something you want to watch on our service,” he says.
Spagnoletto avoids marketing lingo and speaks his mind in concise phrases. For example, he says things like: “The only success worth celebrating is a collective one. It’s the only sustainable one.” Another zinger that gets to the heart of what he does: “It’s not a marketing funnel. It’s a relationship.” He eschews the transactional nature of the marketing funnel concept. “The ultimate brand is one that has an emotional connection because, at some point, every brand will fail, will have a misstep, and it’s the connection that you’ve built over the years that allows you to get over those missteps.”
To this end, Spagnoletto maintains that marketers do themselves a disservice when they separate brand marketing from performance marketing, creating different teams with different skill sets. “That is such a waste of time and money,” he says. “What they’re missing is that the two can actually help get better results than any one of them alone.” At Discovery Plus, the entire media budget goes through an exercise of media-mix modeling that helps the company perfect that mix, “all designed to drive maximum subscriber growth.”
Digital media now takes up the majority of Spagnoletto’s advertising budget so much so that he insists, “we’re almost at a point where we need to retire the word digital.” But he’s clear-eyed about the need to balance data and judgment. “The danger with digital is that because it’s so measurable and there’s so much data behind it, you could optimize yourself into a corner and ignore signals that are a little bit more buried as to where the next wave of growth will come from.”
As a husband, and a father of two kids — a 17-year-old daughter and a 15-year-old son — Spagnoletto knows the next generation of TV watching is a far cry from his youthful experiences in Europe. “[My kids] are actually quite open. When I have them try something that’s a little bit older, they’re into it. For this generation, there’s just so many options,” he says. And it’s worth mentioning, all those old eighties shows like The A-Team, which first inspired the young Spagnoletto, are now available to stream on demand.