KRISHAN BHATIA: Device fragmentation is enabling new use cases for content consumption. In the 18-49 year old demographic, anywhere between 10-20% of our shows are being consumed through digital platforms. When you look at even younger demos, that percentage exceeds 20% and in some cases, 30%. We expect fully that in the next 2-5 years, that will increase dramatically.
It creates an incredible amount of complexity to [build] advertising experiences for all of those use cases.
What happens under the hood to address those complexities?
We just completed an 18-24 month project [to] unify our internal platforms. The objective was to create a uniform advertising technology stack across the entire portfolio, from ad serving to order management to data management to our private exchange platform. We just completed a process that took a lot of time, money and people. What it allows us to do is reaggregate [inventory to address] this fragmented consumption that is occurring and come up with creative offerings so when we go to our client and agency partners, we’re able to say, “you’re able to reach the demographic you’re trying to reach within the context of the voice you’re trying to reach and I can deliver on that.”
Where does NBCUx fit in? Is it an extension of NBCUniversal Audience Platform (UAP)?
NBCUx is our new private exchange offering and it supercedes the UAP. The UAP was a product that was in place prior. The difference is that NBCUx now encompasses the entire portfolio. Sports, news, entertainment and Hispanic now participate in that offering and it includes display, mobile and both shortform and longform video inventory. It’s a very holistic offering that all of our content brands and platforms participate in and offers advertisers something of scale in a very high-quality content environment and across many different categories of audience.
How do you classify programmatic? Does it complement direct sales and custom sponsorships?
It’s one component of our overall portfolio offering to a client. A client might have many different objectives for their brands. Some of them might manifest in a linear TV buy, some might be a cross-platform integration, where you’re sponsoring a content franchise across all of our platforms – that’s a very important part of our offering that our Client Solutions Group leads.
Some of our clients might want to use their own data or our data for buying in a more automated fashion. That’s where the programmatic or private exchange offering comes in. It’s not a segregated effort [with] a separate sales team calling on the same clients to sell them programmatic. [We want to] enable our entire sales team to take that collective offering to market, whether it’s television, digital, programmatic transactions, an integration or sponsorship – it’s all part of the NBCUniversal portfolio offering. That’s different than how it was done in the past, including at this company.
Some broadcasters are hesitant about programmatic. How do you define it?
The irony is, I think [many] assumed [that] as programmatic becomes more prevalent, it’s just a machine to machine automation of conducting business and what we’re finding is, the level of discussion with clients and agency partners is actually heightened around an offering like programmatic. You need to spend a lot of time up front understanding what are the clients’ objectives [and] who are they trying to reach in what types of environments. Then we can create an offering that is ultimately executed programmatically. But you need to spend that discovery time and [have that] dialogue up front [so that], on an ongoing basis, that platform can transact in a more efficient way.
How are clients bucketing digital video and TV spend? Is it one and the same now?
We’ve seen a big shift. In the upfront marketplace this year, we transacted about 70% of our digital video inventory upfront alongside television. Those weren’t all clients, but probably a third of our clients, so there’s still an evolution happening. Clients want to work with fewer, at-scale partners. Historically, there hadn’t been the opportunity or scale or operationalization to enable that.
How long before dynamic ad insertion hits live, linear TV?
What is fundamental to the success of media is the marriage of data and high quality content. Technology enables that in digital today and NBCUx is an example of how we can do that for our clients.
In television, we’ll have to go through several steps before we reach that point. We all want to believe in that future, but there will be lots of steps along the way to use data and insights to inform media buying and planning and optimization in a much more effective way.
What about in video on demand (VOD)?
We’ve seen a tremendous amount of progress over the last year or so. We had about 6X growth in our VOD sales in the upfront marketplace year-over-year, and probably got two-thirds of our agencies onboard to transact with us on that basis. For many years, VOD was kind of this stepchild and I think advertisers realize, “It’s television.”
Now, through continued improvements in dynamic ad insertion, it’s better. It had been clunky for a while, but most of the kinks have been ironed out of the system and there are a few more to go, but we’ve been able to create something that is closer in nature to digital, but on the television, and I think that’s resonating with clients and agencies.
How is NBCUniversal becoming more data-informed in client executions?
In the beginning of the year, we announced a product called NBCU+. That’s a step [toward] working with a select set of clients to use data to inform their media plans and optimize based on the types of audiences they want to reach, in partnership with Comcast. Ultimately, television will get there but there are lots of infrastructure and business model questions that need to be solved until that point. In the meantime, we’re laser-focused on enabling that in digital where we can, and then taking steps toward that ultimate goal on the television side.
How are you prioritizing buy-side partnerships for NBCUx?
We’ve started to work with 20-30 different clients. They all have their own strategies and platform partnerships. At the supply side, you [need] a model that is adaptable to various forms of integration. I don’t think there will be a one size fits all. In some cases, it may go through agency trading desks and in some instances, it may go through a platform that a client is managing internally or a third-party venture that multiple agencies are using. I think that’s just the way of the future – a very diverse set of platform integrations. We’ve seen that across the board and programmatic is no different.
Is there something to be said for remaining “pure play?”
Technology companies have created a perspective on both the buy and supply side that serves [their] interests. We have to demystify that as we work with clients directly. Ultimately, it’s about how we improve the effectiveness of your brand messaging to our audiences in our content. Technology’s an enabler but it can’t be what leads.
Many premium broadcasters don’t want their inventory in an open exchanges. How does NBCUniversal feel?
We do enable open exchanges, but they’re very clearly delineated in terms of the clients that are able to access inventory in that way. It requires a direct relationship and dialogue with a client to gain access to [our] scaled content portfolio on a private exchange basis. Any of the clients we have a direct relationship with either on the television or digital side today, or clients we want to have a direct relationship with, we sit down and talk about our private exchange offering. We’re not really focused on growing our open exchange business as a line of business.
NBCUniversal was a launch partner for Twitter Amplify; you also distribute content to myriad connected TV apps.
We have social media partnerships, video distribution partnerships, ad tech partnerships. They’re all enablers of this cross-platform, converged media consumption that follows the audience, and ensures advertising has an appropriate place in consumption and engagement with our content to ultimately operate that profitably as a business. We test a lot of partnerships and some grow into multiyear partnerships and some don’t, but we have to be open-minded to that.
What’s your 12-24 month focus and your greatest challenge?
I’m excited at the level of progress in cross-platform buying and data enabled buying and the pendulum swinging back to high-quality buying environments.
What keeps me up at night is just how we keep pace and ensure what historically has been a back-office or support function is [instead] a very forward-leaning and strategic function. That’s really what I’ve tried to create in our group and we’re getting visibility with that and my ask to Linda [Yaccarino] and our company is to continue to invest in those capabilities.