NBCU’s Peacock Marks Media’s Latest Try to Connect Consumers, Commercials

In an era when consumers feel more empowered to avoid TV commercials, NBCUniversal is the latest media company to try to get them to bring ads back into their TV lives.

One of the key selling points of big streaming-video services like Netflix and Disney Plus is that subscribers don’t have to endure the commercial breaks and repeated pitches for Downy and Allstate that are so much a part of the traditional TV experience. But NBCU thinks commercial culture still has its place.

Peacock is designed to carry commercials. NBCU said it will make the service available in a free ad-supported version as well as in a “premium” variety – also ad supported – that is bundled for Comcast and Cox subscribers or for $4.99 per month for other customers.

“With more and more streaming choices and consumers feeling subscription fatigue, the $5 price point for a low-ad tier service is a viable option for those who are frustrated by excessive ads on other platforms and who are not able to afford yet another streaming service above the $10 per month price point,” says Anne Hunter, executive vicde president of strategy and growth at Kantar, a media-research company.

When NBCU unveiled its new Peacock streaming service Thursday night, the company played a promotional piece showing all the standout moments of a young woman’s life, some of which involved watching video entertainment with friends and family. “The best things in life are free,” the video told the assemblage of analysts, executives and journalists who gathered to learn about the product.

The concept was partially conceived by Linda Yaccarino, chairman of the company’s ad sales and partnerships business, along with the company’s in-house partnerships team led by Josh Feldman and Steve Rummer, and NBCU is one of many entities working to put forward the notion that ads are good for TV viewers, not bad.

In a different time in the business, viewers understood that “a word from our sponsor” helped make their experience possible. The title of Milton Berle’s “Texaco Star Theater” ensured that.

But the modern TV model, with handfuls of commercials breaking through to interrupt linear viewings of everything from “Sunday Night Football” to “Better Call Saul,” appears to have sundered that connection. TV no longer relies on a “word” from sponsors, but rather a cacophony. By the time the audience gets through back-to-back-to-back-to-back runs of national ads from Burger King, Apple and Geico and local spots from the regional car dealership, they may well have forgotten what they were watching in the first place.

NBCU intends to change that system. Peacock will stream no more than five minutes of ads per hour, Yaccarino said, and keep guard over how often a single commercial appears to a specific subscriber (others have promised this as well, but sometimes to little avail). And there are different kinds of ad opportunities, including single-sponsor episodes that feature just one commercial; voice-activated offers; and commercials placed  to stream in curated collections of content that hinge on a theme or genre.

“Its ad scarcity provides brands with the attention they’ve been missing from the digital world,” says Jeff Greenfield, co-founder and chief attribution officer at C3 Metrics, a media measurement company.

Advertisers have a stake in Peacock taking wing. As more consumers gravitate to ad-free or ad-limited services, their ability to get their pitches in front of the tens of millions of consumers they need to make cash registers ring gets crimped. NBCU has already signed up Eli Lilly and Company, State Farm, Target and Unilever as charter sponsors and more are expected to be announced Monday, according to one person familiar with the situation.

NBCU’s ad-sales team has been pitching the new streaming outlet hard, according to people familiar with the matter. While most of the TV industry’s ad inventory is sold in the annual process known as the “upfront,” NBCU executives are trying to sell a sizable chunk of Peacock ad time ahead of that event, according to three people with knowledge of discussions. Indeed, Thursday’s introduction of the service reminded some observers of an NBCU upfront presentation, jammed with the requisite cameos by Jimmy Fallon and Seth Meyers and peeks at coming programs.

To get on board, advertisers have had to do more than pay money, some of these people said. They are expected to help NBCU publicize and promote Peacock, whether it be in commercials of their own or other types of branded content, such as corporate podcasts or articles.

No matter how much NBCU wants to portray Peacock as inhabiting “white space” among streaming outlets, the company will vie with several experienced rivals for Madison Avenue’s dollars. Hulu offers many of the same commercial formats, and has been doing so for a longer period of time. Coca-Cola and Procter & Gamble, two of the industry’s most influential marketers, agreed to test Hulu’s “pause ads” and AT&T is also running similar innovations on its properties. Amazon Prime customers who use the company’s Fire portal are routinely greeted with banner ads that allow customers to use their remotes to access an offer.

Intriguingly, NBCU now finds itself trying to convince advertisers to abandon an outlet the company helped build. NBC was one of the architects of Hulu, and many of its programs continue to run there. When the video-streaming hub was launching, early Hulu executives like Jason Kilar sat in a conference room at NBC’s 30 Rock headquarters to explain it to the media. Now NBCU, which has ceded control of the service to Walt Disney, will try to put distance between that outlet and its new Peacock. Yaccarino vowed Thursday night that Peacock’s new ad formats would prove better than whatever rivals might provide.

And while more established subscriber video-on-demand services eschew traditional ads, Netflix and Amazon Prime both work with advertisers to embed products into productions and plots – just like CBS, FX and ABC have done for decades. What’s more, Netflix has demonstrated new interest in reaching out to Madison Avenue in new ways, like having Coca-Cola bring back New Coke to call attention to a new cycle of “Stranger Things.”

NBCU presented Peacock as a singular entity that is feathers above the rest of the pack. Others are eager to sell ads to streaming content as well. Whether NBCU’s effort to make consumers aware of the free content advertising helps support gives the company an edge in this new-video free-for-all remains to be seen.

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