People are fed up with TV ads. Here's how NBCUniversal is trying to fix that.
- NBCUniversal knows people are fed up with TV ads, which is contributing to cord-cutting.
- To fix that, it's cutting ad loads in primetime this year.
- NBCU also is rolling out a system to match ads to content, and says people like the ads in testing.
- The challenge is to cut the ad load without sacrificing revenue.
- The company is also trying to get rival companies to adopt its new cross-platform measurement system, but faces resistance from an industry under pressure and fearful of change.
People are fed up with all the ads on TV, leading them to cut the cord and get their entertainment fix on digital streaming services that have fewer to no ads.
Linda Yaccarino, chairman of advertising sales and client partnerships at NBCU, doesn't shy away from the issue.
"The pressure is not to keep the ad load as big as it is," Yaccarino told Business Insider. "And let's call it out - the live linear experience for premium content is less than perfect. It's a lot less than perfect, right?
"We all know there's too much advertising and we all know that is adding to the acceleration of people, whether it could be a spectrum of cord-cutting to cord-shaving or to pushing to the SVOD businesses," she said.
NBCU is using AI to match ads to content
NBCU has announced it plans to cut its primetime ad time by 20% this year, after pledging a 10% cut last year.
It's also testing an AI-powered tool that matches ads with contextually relevant shows at the scene level.
The way it works is, the advertiser indexes their existing ads with emotional or contextual attributes and NBCU matches the ads to scenes with the same attributes. The idea is, people are more apt to accept ads in a positive light and that the ads will have more impact if they're contextually relevant.
"So if I take a State Farm ad that has a multigenerational family in a celebratory setting, it's going to place it across our portfolio in content that spans the gamut of everything from 'This Is Us' to 'The Kardashians' to 'The Tonight Show,' to 'Suits,'" she said.
Early tests with four brands show that the matched ads tested better on measures like likability, memorability, lift, and search, she said.
Rivals are slow to adopt NBCU's cross-measurement system
NBCU is also trying to sell more advertising on its inventory across digital platforms, and is trying to get other industry players to adopt a cross-platform measurement system it developed, called CFlight.
Yaccarino acknowledged it's been hard to get others on board, though, which she attributed to fear in an uncertain business climate.
"It's illogical, but the uncertainty causes a fear which causes a paralysis of movement. And when you look at an industry - particularly if you look at the holding companies, financial models under pressure, working under razor-thin models, brands moving from agency to agency - to add the uncertainty of being a first mover in changing a decades-long business model is a scary thing for people," she said.
"I think some other media companies or publishers are deciding and wrestling with, 'Do I need my own secret sauce or should I go with this other thing to get past the old legacy? Well, I don't want to go with a competitor.'"
Another challenge is reducing the ad clutter without sacrificing revenue. Naturally, Yaccarino hopes to convince advertisers that its ads will perform better and be worth paying more for.
"I would imagine that the opportunity to get next to a unique product that drives more value out of the brand will result in a better business relationship for both the brand and NBCU," she said.