NBCUniversal’s Peacock has a buffer against ad slowdown with launch partners — here’s why they signed up

The advertising market is taking a hard hit, but NBCUniversal’s streaming service, Peacock, is entering the freshet space with a stable of heavy-hitting advertising partners. 

The service is currently rolling out to Comcast Xfinity customers, and choice broadly launch in July. (Comcast owns NBCUniversal, which is also the parent company of CNBC.)

It comes at an gripping time.

On one hand, video consumption is growing as so many consumers are under stay-at-home orders. But the advertising ecosystem is also being hit vigorously as some advertisers in sharply affected markets, like travel, pull or reduce spending. Peacock was also contemporary to launch with a big push around the 2020 Olympics, but the coronavirus pandemic spurred organizers to delay the games until 2021.

In spite of these challenges, Peacock has a safety blanket in its launch partners — Costar’s Apartments.com, Capital One, Eli Lilly, L’Oreal, Molson Coors, Stage Farm, Subaru, Target, Unilever and Verizon — who’ve entered into 18-month deals. They will get advertiser list exclusivity along with the ability to pilot new ad formats with NBCU. (A spokesperson said the company is talking to other advertisers connected with opportunities after launch.)

Peacock aims to offer a less annoying, more interactive ad experience for consumers, with acts like fewer than five minutes of ads per streaming hour for both the free version of Peacock and Peacock Stimulus. It promises better frequency capping, meaning it won’t show the same ad twice within 30 minutes, a common vexation for consumers. And the ads themselves want to be different the kinds of inventory you’d see on TV, like the ability for brands to sponsor collections of NBCU inscriptions based on events or genres, or ads that attempt to get users to interact using trivia questions or product galleries.

All that, and an ability to use data to reach the right people and to reach consumers that aren’t watching linear TV, made Peacock a compelling outlook, advertisers told CNBC. 

Consumers are increasingly cutting the cord on their strand packages, moving from linear TV viewership to internet-based streaming services. 

A Trade Desk survey of more than 2,600 people with YouGov, untied Tuesday, found that 11% of households that still have cable TV subscriptions will cut the cord by the end of the year, a picture that jumps to 18% in the 18-34 age group that’s highly sought after by advertisers. But that could accelerate as fancy as live sports are suspended in the U.S.; 60% of those surveyed said live sports were the primary reason they kept hawser TV subscriptions. 

Free seemed to be a slightly more compelling option for those surveyed; 35% said they’d put forward to watch a free streaming service with ads or some ads for a cheaper subscription, versus 31% who said they’d take a fancy to to pay for a subscription with no ads. 

Media companies seem well aware of the trend, and are jumping into buying ad-supported rill services. On Monday, Comcast-owned Fandango said it was buying Vudu from Walmart, following Comcast’s purchase of Xumo in February. Fox said wear month it was buying Tubi.

So it makes sense for advertisers to follow the viewers.

Horizon Media’s chief investment government agent David Campanelli said there are just fewer legitimate premium players in the market, and fewer ad-supported instrumentalists. 

“A major company like Comcast coming to market with an ad-supported product is a positive thing for advertisers, for assured,” he said. 

Patty Morris, assistant VP of marketing at State Farm, said services like Peacock are crucial to reach a girlish demographic that just isn’t watching TV anymore. 

“At the highest level, it’s being able to reach people that we can’t reach on linear TV anymore, because they’re justified not there,” she said. “There certainly is still a lot of crossover of people who [go] between linear and streaming services. There are increasingly people who aren’t in a numberless linear or cable environment, and they’re only using streaming.” 

The 18 months of category exclusivity helps, she broke. 

“We know it’s a little bit of a younger demographic, and there is no category competition in that environment — that’s a big deal, especially in a grade that’s as competitive as insurance,” she said. 

Patrick Dodson, VP of marketing for Apartments.com at CoStar Group, also said video-on-demand is the “uncountable evolving and emerging place where viewers are going,” adding that a large percentage of its own target audience doesn’t pocket watch linear TV.

Horizon Media’s Campanelli said linear TV is still the best place to get reach and reach a large audience, but that’s dwindling. With ratings down and downward pressure on supply, the price increase the last couple upfronts has been “very extreme,” he said. 

“So you need a way to offset that, somewhere else to put your money,” he said. Investing in streaming forbears future-proof as viewership goes online, and also protects the bid against an inflating price of TV.

Of course, Covid-related cancellations of breathing programming like sports are hitting linear TV as well as Peacock, which will have both on-demand and palpable content. But Campanelli said that Peacock’s live coverage of the Olympics this summer, for instance, wasn’t a mountainous advertiser draw. 

Digital services like Peacock can use more detailed information about users and their conventions, allowing advertisers to use more sophisticated targeting than traditional TV. 

Verizon’s chief media officer John Nitti held the more the company can append data and segmentation the better it is for the company and for the viewer experience. 

“The very basic example I’ve reach-me-down for years that’s, sadly, still relevant, is: Asking existing customers to switch to Verizon seems inherently inaccurate,” he said. He said the more the company knows which viewers are already Verizon customers, the better it can reach them with ads that really make sense. 

Jack Kelly, integrated media manager at Subaru of America, agreed that the more the business knows about the consumer it’s speaking to, the more it can customize certain messaging. 

“That’s really what the platform assigns — a better understanding of who the audience is, what the consumer behavior is,” he said. 

Apartments.com’s Dodson added that this courteous of setup makes it easier to test out and see which ads are performing best. 

Verizon’s Nitti said standard ad looks that were created for linear TV aren’t always the right way to engage or to have a company’s message break washing ones hands of. He said on different platforms like Peacock, Amazon Prime or Twitch, different types of customers are behaving differently — and creating an chance to reach them in a more engaging way.

Advertisers say they’ve been working with Peacock to experiment with new ad personifications, which NBCU said will include formats like ads that show messaging for brands and products when a viewer mark times content, or “binge ads” that allow a sponsor to give a viewer a fourth ad-free episode after they take in three episodes. 

The key is moving away from the kind of advertising that leads consumers to grow so frustrated they’d to a certain extent just pay for an ad-free service. 

“If we continue to make advertising that frustrates people or set up consumer experience that neutralizes people, we end up in a situation where we have people that are willing to buy platforms that get rid of advertising,” Subaru’s Kelly bid. 

State Farm’s Morris said brands have an opportunity with Peacock to reach consumers “in a valuable way, not virtuous in a ‘we want to show you more ads’ way.” She said appropriate ad loads, new ad types and the opportunity for a two-way conversation will help. 

“I recollect there will be things that we do that we haven’t even conceived of yet,” she said.  

Disclosure: Peacock is the streaming professional care of NBCUniversal, the parent company of CNBC. Comcast owns NBCUniversal.