Peacock Leads Streamers Experimenting With Limited Ad Inventories

As Peacock launches, NBCUniversal will be trying to figure out a puzzle many of its rivals are also attempting to solve.

More onetime couch potatoes have adopted video streaming, and they are growing accustomed to seeing fewer ads, and sometimes none. That means media companies need to devise an entirely new architecture for their blocks of programming as well as the blocks of commercials that support them. And while the list of ad-supported streaming hubs is numerous and growing — Peacock may vie with Hulu, Pluto, Tubi, Vudu and more — NBC is hoping what proves successful on its streaming outlet will also work for live linear TV, making it more akin to a good binge session.

“We sell our inventory as one platform, so it’s linear TV and digital together,” says Linda Yaccarino, NBCU’s chairman of ad sales and partnerships. “The distinction between the two seems so yesterday.”

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Not eager to see dozens of ads during an hour of video? NBC has made efforts to cut back the number of commercials it shows in primetime and has limited commercial time on Peacock to five minutes per hour. Tired of seeing the same commercials again and again? NBCU has devised new ad formats for its linear programs and outfitted Peacock with “frequency capping,” or technology that prevents a single ad from, say, a single pharmaceutical marketer from popping up every time a show cuts to a word from its sponsor.

Loading down Peacock with advertising formats from the past, says Yaccarino, would anger modern viewers.

“The live linear experience is less than enjoyable,” she acknowledges. With a new service, the company can create “commercial innovation efforts to actually rebuild the ad-supported model that has been fueling this industry since 1962.”

Others are doing the same. Hulu has from the start offered a model built on fewer ads that are often crafted so a viewer can choose or interact with them; last month it unveiled an ad unit that pushes viewers to seek out a coupon or an offer from the sponsors via a phone or tablet. Tubi, recently purchased by Fox, said that it, too, would offer frequency caps on the number of times a single ad is viewed by the same user. “In this particular area, we have a combination of rivals, so we can never exhale,” says Yaccarino.

NBCU has one advantage over competitors. It has been able to build Peacock from scratch, rather than acquire a streaming asset and then work to stitch it into its other properties. (It has also purchased the Vudu streaming hub from Walmart and paired it with movie service Fandango.) Advertisers ranging from Capital One and State Farm to Target and Unilever have signed up as charter sponsors of Peacock, some with deals that make them the exclusive advertiser from their product category for a specific period.

If NBC has its way, Peacock viewers may see just a single ad during a break, with a quick video “bumper” telling them who the sponsor is. Or they might be able to watch a movie in full if they view commercials before the film starts.

If viewers like the way the ads fly on Peacock, chances are — as overall TV becomes more on demand and interactive — they’ll start to see similar stuff in nearly every video venue.

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