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NBCUniversal ad sales chief says Peacock will focus on innovating ad formats

Peacock, the streaming service from Comcast and NBCUniversal, will focus on innovating ad formats to balance ad effectiveness and user experience, according to comments by NBCUniversal ad sales chief Linda Yaccarino last Thursday at the company's investor day.

More SVOD Subscribers Who Hvae More Than One Service Are Tolerant of Video Ads
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The company has formed a group called Peacock Streaming Council — comprised of creators, engineers, and initial sponsors Unilever, Target, and State Farm — to iterate on new ad formats according to viewer feedback. Peacock launches for free to Comcast and Cox cable and broadband subscribers in April, and it will launch to everyone else in July at $5 per month ad-supported, or $10 ad-free.

NBCU expects Peacock to break even and bring in $2.5 billion in annual revenue by 2024, when it expects the service will have about 30 to 35 million active users.

Here are some of the preliminary advanced TV ad formats that will be available to marketers on Peacock: 

  • Shoppable TV ads display product QR codes on screen that viewers can scan with their phones.
  • Prime Pods — 60-second ad pods — run during the first or last break of a show, designed to reduce ad load and programming interruptions.
  • Pause ads will display a full-screen ad when a viewer pauses on-demand content.
  • Binge ads will allow brands to sponsor an episode of ad-free viewing for bingewatchers.
  • Curator ads will place ads in the most appropriate NBCU programming titles based on specific moods or genres, aimed at making ads more contextually relevant.

Improving the user experience when serving OTT video ads is likely to be key to strong service uptake and ad effectiveness. Advertising in OTT video is ripe for reform, and if NBCUniversal can crack that code, Peacock could attract advertisers who are increasingly shut out of streaming video platforms, most of which are ad-free: None among Netflix, Amazon Prime Video, Disney+, or HBO Max have ads, although HBO Max plans to launch a cheaper, ad-supported option sometime within a year of launch.

To that end, Peacock is taking a few steps: a relatively low ad load (5 minutes per streaming hour — less than the 8 minutes that Roku airs on The Roku Channel, and far less than the 17-18 minutes of ad time per hour on NBCU linear networks, on average); frequency capping to reduce redundancy; innovative formats that reduce disruption of the viewing; and targeting capabilities to improve ad relevance.

In general, there are growing indications that people will likely tolerate ads in OTT streaming, particularly if that means a price reduction or free access — which bodes well for Peacock. The more SVOD services that a streaming user has, the more likely they were to agree with the statement, "I don't mind seeing advertising when I watch TV," per Ampere Analysis — an indication that as costs rise, people also become frustrated and more willing to watch ads.

And nearly one-third (32%) of Netflix subscribers said they would switch to an ad-supported version of the service if it was less expensive, per The Diffusion Group. Beyond the theoretical, this behavior also plays out in consumer viewing choices: About 70% of Hulu subscribers take the cheaper, ad-supported version of the service, per Hulu ad sales chief Peter Naylor.

And the Roku Channel, Roku's free, ad-supported service for its users, is the No. 5 channel in terms of reach on the platform, per company statements in Q1 2019. To that end, monetized video ad impressions on The Roku Channel more than doubled year-over-year (YoY) in Q3 2019, per Roku CEO Anthony Wood. 

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