NBCUniversal Opens New Local Ads Business for Streaming TV
Comcast Corp.’s NBCUniversal is launching a new streaming advertising business for its local TV stations group as viewers and advertisers continue to shift to internet-connected programming.
The new business, called NBC Spot On, is a part of NBCUniversal Owned Television Stations, which includes 42 NBC and Telemundo local stations and their subsidiary digital businesses in 33 markets, a regional news network and other TV and digital businesses. Together, the local TV stations are available in 38% of U.S. homes and Puerto Rico, according to the group.
The launch of Spot On comes as NBCUniversal’s local TV stations saw advertisers shifting part of their budgets out of the local spot TV advertising market and into streaming TV, said Frank Comerford, chief revenue officer and president of commercial operations for NBCUniversal Owned Television Stations.
Ad agencies have shifted as much as 10% of their local TV budgets to local streaming TV, Mr. Comerford said. That doesn’t include advertising by local businesses buying directly.
“We don’t want to just compete for our share of a declining pie,” Mr. Comerford said. “We want to make sure we are able to cover the total local marketplace.”
Local advertising inventory offered by NBC Spot On will cover every regional market in the U.S., said Shawn Makhijani, senior vice president of NBC Spot On and business development and strategy for the owned stations division. It will include streaming commercial time on NBCUniversal’s own apps as well as inventory purchased from other video programmers on other streaming apps, channels and services. In total, the company said it would offer hundreds of millions of monthly impressions.
The TV stations group won’t be selling any inventory on Peacock, NBCUniversal’s coming streaming service, in its first year because its ad time is already sold out, said a person familiar with the matter.
Local advertising spending in streaming TV platforms will reach $1.06 billion in 2020, according to market research firm BIA Advisory Services. That number is expected to double to $2.13 billion by 2024, though it remains a fraction of the $161.3 billion that is expected to go toward all forms of traditional and digital local advertising in 2020, according to the firm.
“Honestly, we are screaming it at the clients [to move more advertising dollars to streaming], and we are not getting pushback on it either,” said Joe Cerone, executive vice president and director of local investment for Publicis Groupe SA’s ad agency Zenith. “Many clients tend to look in their own living room to see where the landscape is going.”
TV network giants are beginning to invest in local streaming businesses. ViacomCBS Inc., for instance, offers local offshoots of its CBSN streaming news channel. Ad time on these local versions is sold by CBS local stations.
NBCU Spot On is tasked with grabbing a “chunk” of local ad dollars that are flowing into streaming platforms, Mr. Makhijani said. “We think this is going to be the fastest-growing part of the division,” he said.
A lot of growth is going to come as advertisers move beyond pre-rolls in front of shorter video clips on news websites, YouTube and other digital platforms and more toward ads that play during the middle of longer videos such as full TV episodes and the streaming of live events.
“The mid-roll business is what everybody is after, because that’s against premium long-form content,” Mr. Makhijani said.
Spot On will also bring more data-based audience targeting to NBC’s local ads business, which so far has only been available for the company’s national ads business, Mr. Makhijani said.
“Data targeting always broke down when you went to the local level because there wasn’t enough scale,” he said.
NBCUniversal Owned Television Stations plans to hire 15 to 20 new employees dedicated to the offering by the end of the year, the company said. Areas the group will hire for will include ad sales and operations, ad inventory management and customer service, among others.