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23 January 2020

Peacock explores copycat Hulu ad formats

Peacock flaunted more tailfeathers this week as the NBCUniversal streaming service prepares to launch around NAB time in April. Fittingly, in the firing line this time was the US live linear TV market, as NBCU’s Linda Yaccarino, chair of advertising and client partnerships, promised that Peacock would not be a vehicle for “ad nausea” which has plagued pay TV.

What was once a taboo topic, getting people to pay for ads in the streaming sphere is becoming a common theme. Quibi, for all its financial backing, has come under scrutiny for adopting a business model that assumes people will pay a subscription fee for an ad-supported service simply based on the quality of content, despite these titles only being a few minutes long. Peacock’s strategy could therefore be seen as even more arrogant and presumptuous, by asking consumers to pay for ads based on the quality of the ads themselves. When it’s put like that, the whole business model sounds absurd.

Nevertheless, Peacock has pledged a maximum of 5 minutes of advertising for every hour of content, and those 5 minutes or less will comprise highly targeted and personalized ads.

A rather official-sounding Peacock Streaming Council has been formed to oversee the company’s advertising strategy – combining the brainpower of engineers and creative types with the three initial ad sponsors – Target, Unilever and State Farm.

The council of big birds is currently toying with a few advanced TV ad formats although it isn’t yet clear which – if any – will be made available to marketers. Peacock could include something called Prime Pods, which are 60-second ad slots running during the opening or closing ad breaks, designed to minimize in-show interruptions.

QR codes could also be included in “shoppable ads”, a feature already commonplace in poster ads, while another feature would bring up a full-screen ad when a show is paused. Mood and genre-based ads are also being explored.

More audaciously, in what looks like a straight-up copycat of Hulu’s recent ad format R&D, Peacock is also looking at binge ads. The basic concept here is to reward binge watchers with less ads – allowing brands to sponsor an ad-free episode.

Hulu has provided a bit more detail than NBCU. The Disney-owned platform is using machine learning techniques to establish when a binge session is about to commence. This data is then served up to brand partners, presumably with a whole host of viewer data to personalize the experience, from where they can launch into real-time bidding. Every third episode of a binge session will spring up a message to inform the viewer they are a binge watching champion and will be rewarded dutifully for their loyal escapades by showing the next episode ad-free.

Circling back to Yaccarino’s comments that sparked this discussion, she also opened up about how the underlying Peacock advertising platform will develop over the next two to three years. “What we are building towards is a fully open, transparent platform that you ultimately can trade automatically, because automation hasn’t come to the linear content publishers in the US, and it’s something we have our foot on the gas,” she said.

“Because we are bringing it to the marketplace and we can throw out that old legacy playbook, we have a brand-new platform that will be technologically sophisticated, but it is new. So, we don’t have to worry about tearing anything down of legacy linear television norms, which in the US is an unbelievable amount of ads from 10 to 15 minutes or so per hour,” added Yaccarino.

“Hopefully by controlling that subscription fatigue and controlling the wallet, where if I am able to get as few as possible but the right ads, I actually enjoy that relationship more than paying with no ads,” she justified.

Details have now come to light that after Peacock becomes available free to Comcast and Cox cable TV and broadband subscribers in April, everyone else will have to wait three-months to access the service. That’s an inexplicably long-time between launch phases. Non-subs will be able to sign up in July to the $4.99 a month ad-supported tier or the $10 monthly tier without ads.

Peacock is projecting somewhere between 30 million to 35 million active users by 2024, by which time it expects the service to be raking in an annual revenue of $2.5 billion – enough (it believes) to break even.