NBCUniversal unveils its plan to use tech and a better TV experience to compete with Google and Facebook in 2019

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NBCU is trying to stave off the shift of TV dollars to digital platforms.
The TV company is expanding its use of cross-measurement system CFlight in 2019.
It’s also continuing to cut ad clutter and make ads more relevant.

Linda Yaccarino, chairman of NBCUniversal’s advertising sales and partnerships, took some bold steps in the past year, rolling out cross-platform measurement system CFlight, reducing TV ad clutter, and using technology to match ads to content.

In 2019, she’ll be expanding those initiatives across NBCU’s portfolio, she announced in a company memo going out November 26.

NBCU came up with CFlight as a way to measure and get credit for the 50% of NBCU viewing that now occurs on digital platforms, outside traditional TV. It works by collecting data from measurement sources like Nielsen and Comscore, as well as viewing platforms like Roku and Hulu.

NBCU tested CFlight in the winter Olympics and convinced agency giants to buy all its TV inventory this way during its 2018 upfronts. Agency heavyweights Omnicom, GroupM, and Magna gave positive testimonials. It’s a fundamental shift in how TV is sold, and NBCU’s hope is to make CFlight the industry standard.

Based on data from 10 campaigns that have run so far, CFlight reached 100% more adults 18-34 compared to campaigns that ran on linear TV only, according to NBCU.

“We’ll be going all-portfolio next year for CFlight,” Yaccarino told Business Insider. “We came out of the other side of the upfronts, and the market accepted it. We confronted their questions and iterated what they needed us to achieve. That’ll continue as we get better at counting stuff.”

Fewer, pricier ads

Aware that viewers are increasingly preferring to watch shows on streaming services, where commercial time is shorter, NBCU is also on a mission to improve the viewing experience. It’s doing this through a variety of initiatives it calls “Commercial Innovation.” NBCU cut its traditional commercial ad time by 10% in 2018 and plans to further cut ad time by an undetermined amount in 2019. In place of reduced traditional ad time, NBCU rolled out "Prime Pods": 60-second ad pods that can run in the first or last break of a show.

The company also is rolling out the ability to match ads to commercial content. It does this by using artificial intelligence and closed captioning to match ads to relevant content based on the advertiser’s goals.

NBCU said that based on four weeks’ worth of data, comprising 41 Prime Pods, 70 ad units, and 40 advertisers, the Prime Pods showed a 38% lift in ad likeability and 23% lift in ad memorability.

Also in 2019, NBCU plans to build on a partnership with agency Giant Spoon to provide media strategy and planning resources for the growing number of direct-to-consumer and other performance-based advertisers that often skip agencies in their marketing. The hope is to show that TV ads, traditionally seen as brand- and awareness-building vehicles, can drive business outcomes in the way Google and Facebook have become known for doing.

NBCU is set to announce the brands that are part of the pilot early in 2019, share results of the pilot by Cannes, and then roll the program out to other agencies.

“We want to get as great at counting stuff as Google,” Yaccarino said. “Now we’re able to have a conversation about the effectiveness of television advertising.”

Agency adoption needed

A better TV viewing experience and an improvement in Nielsen’s TV measurement approach — one that takes digital viewing into account — are measures the industry has been looking for. The question is whether all the players are ready to accept them in practice.

The goal is for CFlight to be adopted by other TV sellers, and so far it’s gotten targeted TV company Simulmedia to adopt it to sell over-the-top TV (OTT) advertising. Dave Morgan, CEO of Simulmedia, said it was the most advanced solution he’d seen in the market and that it aligned with Nielsen, which is still the industry standard bearer for TV measurement. Morgan said that NBCU is well positioned as a seller of TV advertising because it represents stability at a time when rivals Fox, Turner, and CBS all are undergoing mergers or leadership changes.

But TV advertising is still bought using Nielsen data. For CFlight to get off the ground, agencies need to see Nielsen is on board with it. Agencies also still tend to buy TV and digital inventory separately, while CFlight wants to sell TV and digital together, so adopting CFlight would force them to confront turf and accounting questions.

Finally, these efforts all require advertisers to pay more. CFlight assumes it will capture 30% more viewing, which assumes advertisers will pay commensurately. Cutting ad inventory is a bet that advertisers will pay more to make up for the decreased inventory, and not all advertisers are prepared to do so.

“Industrywide, ad loads have gone up,” Morgan said. “That’s the bigger question — will these things be followed up with. That means dramatically changing the revenue, because you can’t have the ad industry pay you 30% more because you have 30% more ads. Some advertisers will, but the advertising community as a whole has not yet shown a willingness to pay significantly more.”

Here's Yaccarino's full memo:

Hello all,

I hope you had a wonderful Thanksgiving—filled with fun conversations around the table, and
restful, post-dinner naps. As we return from the holiday, I want to express my gratitude for this
entire team, celebrate our accomplishments, and share our vision for the year ahead. To do it
justice, it takes a long memo, but I promise it’s worth the read.

At NBCUniversal, we’ve always held ourselves to high standards of quality, transparency,
service, and safety. Every action we take is guided by our values as a company and the value
we deliver. And now, as our industry faces an exciting inflection point, we must go even further.

It’s time to set a new standard—for ourselves, our viewers, our marketing partners, and the
entire industry. But you might be wondering: What exactly does “set a new standard” actually
mean?

Setting the new standard is a reminder to place ourselves in the minds of consumers and
clients. It’s a challenge to rethink everything we do while building upon the strong foundation
we’ve established. It’s raising the bar across our business—from improving the viewing
experience, to connecting brands to scaled audiences, to creating outcome-based
measurement, to developing technology solutions with purpose.

In other words, setting a new standard means refusing to settle for the status quo.

Our journey to set a new standard began one year ago, when we convened our partners,
colleagues, and competitors for the State of the Industry Forum. We confronted the inertia our
industry faces and gave each other permission to make bold changes. Since that gathering,
our company has led the way forward:

- We reimagined the viewing experience with commercial innovation across our networks: just
consider the success of Prime Pods. Every KPI has improved—higher likability, brand recall,
and conversions—proving the effectiveness of smarter television.

- We doubled our investments in technology to expand marketers’ buying options through
automated offerings. Our advanced advertising solutions are secure, easy to use,
affordable, and deliver real outcomes.

- We created CFLIGHT, a new cross-platform measurement that finally shows how real
people consume our content across all screens. This transparent metric is being adopted
and embraced by the industry.

- We deepened our digital partnerships with Apple, Buzzfeed, Snapchat and Vox, and
licensed our technology in OpenAP. Plus, we also have our new global partners at Sky.

- We evolved our organizational structure around mass reach and targeted audiences,
strengthened our creative capabilities, and launched an ROI program for D2C businesses.
This is what transformation looks like. But the reality is, we need to do more.

We know people want better viewing experiences and marketers want growth. It’s up to us to
deliver both. We need to liberate ourselves from legacy processes and move towards a system
that accurately reflects consumer behavior, and client needs.

In 2019, as a media and technology company, NBCUniversal will set new standards.

- We will set the new standard for the viewing experience with commercial innovation.
People love our premium content and trust our family of networks. We must honor their
experience as we design better ways to engage with brands. That’s why we’ll continue to
reduce time and clutter and expand Prime Pods across the portfolio. Plus, we’ll make ad
placement smarter, more targeted, and more relevant by pioneering Contextual Intelligence.

- We will continue setting the new standard in measurement. For too long, we’ve been
tied to traditional metrics. Marketers deserve to base their decisions on business results, but
ratings don’t even come close. At NBCUniversal, we’re going to lessen our reliance on
legacy measurement. Instead, we’ll continue to invest in measurement that focuses on
audiences and business outcomes, including scaling CFLIGHT across our entire portfolio.

- We will set the new standard in technology in our industry—and we’ll use that
technology for good. We want to democratize television advertising, so more businesses
can create strong brands and connect with real consumers. We’ll again double our
investments in technology to enhance our ongoing automation and optimization efforts. We’ll
also continue to prove digital advertising can be a safe and valuable experience for people
and marketers. Don’t let anyone tell you differently.

So now it’s up to us. These massive transformations are only possible if we work smarter and
more collaboratively, as a company and an industry. And they will only happen if we stay true to
our values, and continue to put our audiences and clients first.

That’s why I’ll be looking to each of you to help set this new standard in every way you can.
And—to accelerate progress, encourage partnership, inspire consensus, and hold ourselves
and others accountable—we’ll also reconvene the industry in the first half of 2019.

I feel privileged to work with this incredible team and look forward to everything we’ll accomplish
in the year ahead.