Advertisers Responsive To NBC/News Corp.'s 'Largest Ad Platform On Earth'

Advertisers are falling over themselves to join the yet-unnamed video venture between News Corp. and NBC, according to Thursday's conference call hosted by News Corp.'s President-COO Peter Chernin and NBC Universal's President-CEO Jeff Zucker.

"Within four hours [Wednesday night] we had five charter advertisers," said Zucker. Two more came on yesterday morning, with many additional deals being worked out. "I think they see the value," he said.

Initial named advertisers are General Motors, Intel, Cisco Systems, Cadbury Schweppes, eSurance and Royal Caribbean.

Chernin said he foresees the site, expected to launch this summer, will be "the largest ad platform on Earth," thanks to distribution deals with Yahoo, Microsoft's MSN, Time Warner's AOL and News Corp.'s MySpace. The combined audience will span into the hundreds of millions, or 96% of the U.S. Web viewing audience, according to Chernin.

"The industry knew there would be a response from the programmers to develop a platform safe for their content," said Curt Hecht, executive vice president and chief digital officer for GM Planworks, who negotiated the deal for GM's participation within 90 minutes of getting the call Wednesday night.

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"We think this is an obvious deal," Hecht added. "You've got portals with great scale and reach and good programming partners coming together."

As a stated proponent of finding video solutions that go beyond the pre-roll, Hecht said he expects to see some interesting new models emerge from this venture. He cited GM's existing sponsorship of Jay's Garage on NBC.com as an example of the type of programs GM would like to see more of. Built around Jay Leno's passion for automobiles, he said, it demonstrates how GM could leverage NBC's talent in a unique way.

"It's a lot of folks who have to dance together, but our ability to get companies to partner is one of our strong suits," said Hecht of the viability of News Corp. and NBC Universal being able to co-exist peacefully in the long term. It was GM, he said, that helped get CBS and Comcast together on offering the Survivor finale free, and also sponsored the CBS March Madness channel on YouTube.

Tom Campbell, senior media manager for Intel Corp., said it made sense for Intel to get in as a charter advertiser because the company is focused on reaching people through technology and already runs lots of media with both partners.

"We're really excited," Campbell said, "because people are watching more entertainment through their PCs. and we believe our products are uniquely suited to help people in that way."

Campbell said he's waiting to see what ad formats are offered through the new venture.

A unique ad sales force for the venture will be put together in the coming months, said Zucker, who would only describe the financial terms of the deal as a revenue share between News Corp., NBC and copyright holders.

"The smartest thing about this is that they'll sell the ads and they can determine what cut to give to the partners," said David Hallerman, senior analyst with eMarketer. He said that how well they can break out of the pre-roll video model may determine the venture's ultimate success.

Media buyers, still unsure how best to reach the YouTube generation, were reluctant to recommend a specific ad strategy for News Corp. and NBC.

"When considering pre-rolls and the interests of the user versus the marketer, these guys have usually sided more with the marketer," said Sarah Fay, president of Aegis' interactive ad agency network, Isobar, U.S. "That's not to say pre-rolls are always bad. A lot of it has to do with the quantity of quality content, which these guys are in a position to address."

Neither Chernin or Zucker would say how prominently pre-roll ads will feature in the new site. The new site will incorporate complete Web 2.0 content sharing functionality and the ads will travel with the player, meaning distributed ads in addition to distributed content, they said.

"We're going to try to maximize the viewing and the use of ads," said Chernin. "Certainly we've got a lot of learning to do." One of the keys to the venture's success--along with aggregation, consumer control, and ubiquity of distribution--is "the opportunity for premium monetization," he added.

"In the last few months, we've learned a lot from our own site," said Zucker. "We've actually been shocked to see consumers sit through a whole show with ads."

That said, the companies seem clear as to where the deal's value lies.

"There will be user-generated videos, but the emphasis here is on the premium content and we think that's the value proposition," said Zucker.

eMarketer predicts spending on video advertising will grow from $775 million this year to $2 billion by 2009, and $2.9 billion by 2010. And while video ad spending growth peaked this year at 89%, according to eMarketer, growth will remain above 50% through 2009, falling to 45% by 2010.

Pre-rolls or not, Fay noted, News Corp. and NBC are better positioned than YouTube to forge deals because of their longstanding relationships with advertisers.

"They'll be able to build on existing relationships," she said, "using this new service as a value-add to existing deals."

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