How Digital TV Delivery Will Change How NBCUniversal Sells Ads For The 2028 Olympics

By the 2028 Summer Olympics in Los Angeles, NBCUniversal believes it’s “within reason” that all TV will be delivered through an internet connection, said its EVP of strategy and business operations, Krishan Bhatia.

“We firmly believe that all content and associated advertising will be distributed over IP [internet protocol], over digital means, whether that’s to a TV set, mobile phone, tablet or whatever devices there are in the future,” Bhatia said. “That’s the vision the entire organization can rally around.”

This future-looking stance is a business imperative, as NBCU, which holds the rights to the Olympics through 2032, sells advertising for the Olympics years in advance. It recently signed a deal to sell Olympic sponsorships for the 2028 Summer Olympics in Los Angeles, and is in deep negotiations with advertising partners for the 2020 Tokyo Olympics.

“Believing that everything will be delivered digitally orients you a certain way in how you invest in your business, what products and capabilities you create and serve your clients,” Bhatia said.

NBCUniversal anticipates that viewing behavior and advertising will look vastly different, even during tentpole events like the Olympics.

While people will continue to tune into prime-time medal events, those projected 3 billion minutes of Olympics coverage will be accessible in more places – with different ad formats and addressability options than exist today.

The 2020 Tokyo Olympics, for example, will span 3,000 hours of coverage across 33 sports and 339 events. 205 million people are projected to watch the games. Viewership will span different devices, channels and apps.

To accommodate the digital delivery of TV, NBCU is making a number of bets, including an OTT service that will launch next year, improving content discoverablity, and building out both addressable advertising – even within linear broadcasts – and interactive advertising capabilities.

Bhatia talked to AdExchanger about how NBCUniversal’s vision for TV’s future will impact tentpole events like the Olympics.

AdExchanger: If everything is delivered digitally 10 years from now, will linear inventory’s target getting chopped up?

KRISHAN BHATIA: Yes. If you look at the delivery mechanism today, it’s forced us to schedule the same ads in the same programs to be seen by everyone. Digital delivery creates addressability, which means we can vary the ads, not just by audiences, but to make them more contextual. We can do more creative versioning with marketers, see what creatives pair well with certain types of content and optimize them.

We think there is a lot of alignment between the contextual relevance of a product and the content you are watching. There is a mounting body of evidence that alignment creates deeper emotional connections with consumers, and drives brands’ KPIs in terms of awareness, consideration and intent.

Is there a certain point of adoption that needs to happen before linear can be chopped up?

Everyone is waiting for that tipping point.

Whether there is a magic number around 30%, 40%, 50%, I don’t know. But once you have a third of the marketplace enabled with a new technology, that can be considered a tipping point or a point of acceleration.

We are getting close to that in terms of sheer consumption of content. Even in our prime-time business, we have one-third of consumption happening digitally in our platforms, on average, for the 2018 to 2019 season.

How does fully digital TV delivery change the prospects for linear addressability?

The perspective to date was informed by the need to use the existing MVPD footprint, and make it addressable. There are inroads to addressability in VOD and linear, but they are still very slow to scale to a level that marketers can embrace in a significant form.

OTT is growing faster than people expected. When it’s delivered digitally, it by definition becomes addressable. Consumption on our OTT platforms is up on average between 30% and 40% year-over-year.

We are betting on both paths: working with MVPD partners to enable traditional addressable, but certainly leaning in with partners on the OTT side to accelerate that state.

What else needs to happen for linear addressability?

All the platforms still have to enable it in partnership with programmers in the advanced stages. There are business constructs that have to happen, technology investment that has to happen because of the fragmented landscape; it’s going to lag the consumption shift [to OTT].

How will NBC’s streaming service work, especially around broadcasting Olympics content?

You should be thinking about all content being made available on all platforms. We already do it today. The NBC Sports app turns into an Olympics destination for that period and the sports group and Olympics team has been investing in live and on-demand technology and a content library.

What will be different about how people watch the Olympics in the future?

People want to enjoy the spectacular moments, the biggest medal-winning events, together as a family, on the big screen. And there is a large section of the population that wants to match more and deeper and arguably niche sports on their own terms, at the time they want to. That’s only going to accelerate through the advance of OTT distribution. People are rediscovering content through OTT. That’s going to be a constant to bet on.

What are the biggest risks in your vision of a digital TV future?

When you turn on your TV today, the traditional distribution ecosystem ensures an incredibly high, HD-quality service.

As you distribute through new platforms, there is inherently fragmentation involved through different devices, operating systems and platforms. The points of failure increase. We are investing in ensuring that when you tune into OTT content, whether live or on demand, it’s just as good if not better than the experience with your cable box.

People are demanding lighter ad loads. Will brand integrations become a greater share of the advertising in the 2028 Olympics?

We already run a 30% to 40% lower ad load in all our digital platforms today compared to linear TV, and on linear we are investing a reduction of commercial load with the Prime Pod.

On new platforms, we will determine ways to reduce ad load further, because it creates a better experience for consumers and a more effective space for advertisers. We can give some of that ad time back to consumers by utilizing new formats as well as addressability and targeting that increases the value of those commercial spots.

Shoppable commerce is just one example of how you can use traditional commercial space to create a more engaging environment for consumers and marketers, and link full-funnel attribution between brand exposure and an action. We are running other engagement formats, with partnerships with BrightLine, in digital streams already.

This interview has been condensed and edited.

This post was syndicated from Ad Exchanger.