In December we laid out the new players entering the streaming wars and discussed the impact we expect them to have on the industry and consumers’ viewing habits. One of the more unique new offerings we focused on is NBCUniversal’s Peacock. Since our initial report, NBCU has published a detailed press release outlining what exactly the OTT service plans to bring to the table.
While the platform is launching with a diverse and high-quality content library that combines original, licensed, and live programming, it’s their unique approach to advertising that has us most intrigued.
What have we learned? The Peacock basics
Before we dive into Peacock’s ambitious preliminary advertising model, let us bring you up to speed on the key platform launch details.
While Peacock’s competitors are enticing new subscribers with free trials, NBCU will instead reward its Comcast customers with early access to the free service two months prior to its national release.
- Comcast Xfinity X1 and Flex customers: April 15, 2020
- National Launch to the public: July 15, 2020
A tiered experience:
Peacock is ad-supported and free to all users as sources within the industry initially speculated. If you just audibly groaned at the thought of ads disrupting your favorite shows, fear not, paid tiers are of course available for those wishing to eliminate ads and unlock additional content.
- Peacock Free: The no-frills version available to all viewers includes 7,500 hours of content with streaming service essentials like complete licensed series, movies, and select original programs. Peacock attempts to separate itself from competitors though by offering next-day viewing of new episodes of current first-season NBC series, live news and sports coverage like the summer Olympics, and genre channels like the “SNL Vault” or “Family Movie Night.”
- Peacock Premium: This next tier opens the door to more than 15,000 hours of content including current episodes of returning NBC seasons available next-day, access to late night talk shows earlier in the day (even before they air!), and bonus sports programming like Premier League. Comcast and Cox’s combined 24 million subscribers will receive Peacock Premium free of charge. The general public can unlock this tier for $4.99/mo. Peacock Premium is still ad-supported for all viewers.
- Ad-Free Experience: Comcast and Cox subscribers can upgrade to an ad-free Peacock Premium experience for $5.00/mo, while the general public can receive all content ad-free for $9.99/mo.
An ambitious approach to advertising
Peacock is forecasting over 30 million users by the end of 2024, and NBCU is betting the farm on its unique free ad-supported model to ensure they achieve that goal. The service hopes this approach will help distinguish itself from the crowded landscape of its ad-free competitors like Netflix, HBO Max, and Apple TV+.
Ad-supported video streaming is not anything new. Hulu, Peacock’s most direct competitor, has been offering high-quality, ad-supported programming for nearly ten years. Peacock will be the first to offer such a vast and premium library for no fee at all (Hulu’s most basic package costs $5.99/mo and is ad-supported).
NBCU is confident that its library of content will be strong enough to fuel this strategy. Linda Yaccarino, NBCU’s chairman of advertising and partnerships states, “It is impossible to overstate the power of free. Zero dollars means zero barriers between advertisers and consumers.” NBCU knows though that ads can still be burdensome even within a free viewing environment, so they’re exploring ways to promote partners in a less traditional manner.
Peacock is launching with a set of very select advertising sponsors and will not feature any programmatic ads in the immediate future. Launch sponsors include Target, State Farm, and Unilever, among several others, and packages ranged from $15 million for a six-month commitment to $25 million for an eighteen-month commitment. These initial partners will serve on the Peacock Streaming Council, a group dedicated to testing ad formats and learning what encourages viewers to respond.
As a baseline, the service promises to serve the lowest number of ad minutes of any streaming platform as well as implement strict frequency caps so viewers avoid ad fatigue. Peacock will show no more than five minutes of ads per hour of content compared to Hulu’s ~seven-eight minutes and traditional TV’s ~fifteen minutes.
Peacock is making a major push to break the mold and create an ad experience centered around engagement, striving to create an environment that is both enjoyable for the viewer and provides advertisers more immediate results. At launch, sponsors can take advantage of ten non-traditional ad formats, several of which allow the viewer to purchase products directly from the ad. See an overview of some of the more unique ad formats below.
- ShoppableTV: NBCU’s proprietary ad format lets viewers purchase products by scanning a QR code with their phone at relevant points throughout a program. NBCU has already used this technology to pitch a Lacoste clothing collection during a Novak Djokovic tennis match at the French Open.
- Binge ads: Couch potatoes who have just finished their third consecutive episode of a show can view their fourth episode ad-free courtesy of a sponsor.
- Engagement ads: These ads can include things like trivia questions and videos designed to encourage interactivity.
- Explore ads: Presented when a viewer pauses a show, these ads intend to promote contextually relevant content based on what the viewer was just watching. For example, a viewer hits pause in the middle of a car chase in a current Fast and Furious movie and gets served a Fandango coupon for five dollars off the newest Fast and Furious movie.
- Curator ads: Advertisers can sponsor curated collections of content based on moods, genres, themes, etc. Imagine “Crime Thrillers brought to you by Xfinity Home.”
NBCU is certainly experimenting with this model and the jury is still out on whether or not it will be a success. While more conservative brands are waiting to see how the platform performs, the launch sponsors are anticipating large returns. NBCU is expected to spend more than $300 million promoting Peacock in its first year, and sponsors have agreed to a co-marketing relationship where each brand will promote Peacock on their websites, in their stores, and in their media.
The sponsors willing to jump aboard for launch know that viewing habits are shifting and Peacock is an opportunity for brands to gain exposure in a digital environment alongside content that is of the same quality as primetime TV. Although the price point is high, the fact that sponsors are gambling with NBCU, a massive media conglomerate, seems to put them at ease. Ultimately, if Peacock is unable to convert enough viewers, ad dollars can be redistributed to other NBCU outlets like traditional linear TV. “The good news is they’re going to have other media for me that I use. There are not many media companies I can do that with,” said an anonymous ad executive.
While NBCU has a safety net of other properties, the organization is hopeful that Peacock will thrive on its own. It’ll be interesting to see how many of these current ad formats succeed and whether or not we’ll see Peacock trim the fat or continue to expand on its bold approach. One thing that’s for certain is that the streaming industry is about to rapidly evolve and Peacock could be at the forefront of a whole new era of OTT advertising.
This article was written by Zachary Atlas, product marketing manager at SpotX