Complex Streaming Deals Push TV Networks to Make Advertising Pitches Far Ahead of Schedule

Courtesy of NBCUniversal

Laura Molen is using November to pitch Madison Avenue as if May were just around the corner.

The NBCUniversal ad-sales president (above, pictured) is ready to unveil two new advertising formats for Peacock, the company’s streaming-video hub, as well as tout a host of new efforts to incorporate advertiser data; new quality standards; and partners like Google DV360, OneView, The Trade Desk, and Yahoo that will help so-called “programmatic” marketers using algorithms to get their ads in front of specific kinds of consumers to make better use of the venue.

With only five minutes of ads per hour, commercials on Peacock “are not in a cluttered space, which keeps a pristine, high-end feeling all throughout the programming and advertising experience,” says Molen, in an interview.

In a different era, NBC and its TV rivals would likely save some of the sweet talk for next year. But with Wall Street scrutinizing media companies’ streaming progress and advertisers pressing to understand how the dollars they have moved from traditional TV to digital venues like Peacock, Hulu, HBO Max and Tubi are working, the networks have come under a new kind of pressure. To deal with it, many of them have already begun promotional efforts they would normally have saved for the industry’s annual “upfront” sales market in spring.

Walt Disney last month unveiled “clean room” technology that lets advertisers match their consumer data with segments of audience defined by the media company to gain insights that help determine where commercials ought to be placed to reach likely customers. Disney also vowed to shake up the way it presents during the upfront. Discovery, slated to merge with WarnerMedia next year, this week launched a series of new streaming ad concepts that include the ability to make certain a specific sponsor’s commercial is the first one any user sees while surfing Discovery Plus. Univision’s top ad-sales executive, Donna Speciale, says in an interview that she has started having in-person meetings with clients again, and has been traveling to various parts of the country –with some of the chatter focused on issues for next year’s haggle.

And there is more on the way. WarnerMedia plans to unveil new types of commercial inventory for the ad-supported version of HBO Max, which in 2022 is expected to show a slate of first-run films that will stream on both the subscription and ad-supported tiers. “We think we will bring in more consumers overall to the HBO Max family, and we will go to this acceleration phase of driving subscribers to the AVOD service,” says JP Colaco, president of advertising sales for WarnerMedia, in an interview. Univision expects next year to unveil two distinct tiers of service for its streaming hub PrendeTV, says Speciale, a global subscription-based plan as well as an upgraded ad-supported effort.

The big media companies for decades typically kept their powder dry until late winter and early spring, the better to cajole blue-chip marketers with advertising innovations in advance of the “upfront,” the annual selling season when U.S. TV companies try to sell the bulk of their ad inventory for the next cycle of programming. Before they can get to 2022, however, the networks seem to have some explaining to do about 2021.

With traditional TV viewership in decline as couch potatoes move to streaming venues for their programming fix, the big networks insisted many of their top clients buy digital inventory, often as a way to sell more advertising overall. And yet, according to buyers, some advertisers refused, or had significant regrets about the transactions. “No one liked being forced to buy it,” says one media buyer with knowledge of some of the recent upfront negotiations. “Some money came back because media partners didn’t forecast correctly. Overall, it left a bitter taste, and no one left particularly happy.”

Omnicom Media Group, one of the nation’s largest media buyers, earlier this month issued a set of guidelines it hopes will be met in the next round of significant TV-ad talks. Even as advertisers increase their spending on so-called “connected TV” venues, the company said in a statement, it has noticed “fundamental flaws and gaps” including “a lack of linear TV-level transparency; an inability to understand audiences at the household level across partners; and a measurability gap that translates to an open invitation to cyber criminals who are generating millions in ad fraud.”

None of that seems likely, however, to curtail Madison Avenue’s interest in streaming. OMG, which represents PepsiCo and Apple, among others, forecasts advertisers will spend $13.4 billion on connected TV in 2021, compared with more than $9 billion last year. Buying and sales executives say intense viewership for sports and continued chatter about how the industry will deal with its main audience-measurement partner, Nielsen, whose efforts have come under heavy scrutiny, have also spurred more discussion between advertisers and networks.

There are other reasons to get started earlier than usual. Streaming helps the networks do business with new groups of advertisers who typically didn’t buy traditional TV commercials. A high-priced primetime TV ad is often out of reach for small or local advertisers, many of whom may only wish to reach consumers in a particular region of the country or who have specific buying behaviors. Streaming, however, allows different sponsors to run ads depending on viewer characteristics. “We continue to be a mechanism for large-cap marketers that work with large agencies to make upfront commitments,” says Krishan Bhatia, president and chief business officer of NBCUniversal’s ad-sales unit. “We will also see a lot of clients who did not typically purchase in the upfront,” including direct-to-consumer upstarts and those represented by smaller media buyers.

NBCUniversal’s array of enticements is large enough that it may require some time to digest. One ad innovation, called a “highlight ad,” can show up at specific moments and engage viewers with a line about the on-screen action. People who want to learn more can use their remotes to “telescope” and find out more. A second concept gives marketers the opportunity to “sponsor” a commercial-free break, with viewers being told the advertiser made possible a quicker return to a chosen program. The idea, says Molen, was based on feedback from early Peacock advertisers, who told NBC they were looking for new ways to “surprise and delight” streaming fans while they binge. “They helped us come up with another way to give consumers more content with less advertising,” she says.

Buyers expect others to come forward with other lures and ideas. Amazon, they say, is working on a commercial format that will push viewers to use the Alexa digital assistant to find a product being advertised.

Some of this activity comes as Wall Street is taking a more skeptical view of how much subscriber growth is left to win in Hollywood’s ongoing streaming wars. Disney, for example, disclosed earlier this month that it notched more than two million new streaming subscribers in its most recent fiscal quarter, compared with 12 million in the previous period. Comcast did not disclose subscriber gains for NBCU’s Peacock in its most recent quarterly report, and noted a $520 million loss on the service, raising eyebrows among analysts. “Peacock has certainly gained subscribers,” noted Craig Moffett, a media analyst for MoffettNathanson, but “Peacock is, by any reasonable standard, a disappointment. They will have to spend more” on broadband content.

But as TV viewers embrace new ways of seeing their favorite dramas, comedies, talk shows and sports teams, so too will advertisers.