The move is aimed at capitalizing not only on NBC Universal's video content but also the content of its distribution partners. The idea is that wide video distribution coupled with top-notch content, with rights clearances, will be the killer app for advertisers fazed by a multitude of online buys.
NBC Universal hopes its open business model -- one that welcomes rivals CBS' CSTV.com and News Corp.'s IGN Entertainment to the syndicate -- will give it the edge in the online video world, before YouTube does to broadcast networks what Google did to print.
"To unlock the value of video content, we should combine our strength to unlock the video package of the future," said NBC Universal Television Group President-Chief Operating Officer Randy Falco.
From an advertisers' perspective, the new initiative which comes under the aegis of the NBBC, or the National Broadband Company -- NBC Universal's partnership with affiliates -- will help marketers reach up to 82 million unique users with a single media buy, which NBC positions as a figure that puts it in the big league of online giants. Nielsen Net Ratings for July pegs Google's unique users at 95 million, Yahoo's at 106 million and News Corp.'s at 61 million. Those partners include some well-known online brands such as Forbes, Newsweek, A&E, About, Vibe, CSTV and CNet as well as less established names such as HowStuffWorks and Artists Den.
How it works
The way the ad model works is that if NBC brings the advertiser in, it keeps the majority of the CPM, or cost per thousand rate. If a content provider or a distributor brings in the advertiser, then the same thing goes and NBC instead receives a flat fee for its video. The model enables everyone to gain a piece of the action, though it could provide some headaches where more than one partner wants to own the advertising relationship. The video will be provided free to users. The ad offering is brand new, though the idea, spearheaded by Mr. Falco, has been fomenting since February.
When asked whether this syndicate would jeopardize traffic to other NBC websites, Mr. Falco said: "What we're all going to find is that it isn't going to affect it one bit." As to what kind of content would be available, Mr. Falco said, "This will be a little bit of launch and learn."
He said the "Lazy Sunday," episode, which involved a hugely popular skit from NBC's "Saturday Night Live" airing on YouTube without consent, was a lesson never to be repeated. "We have no issue with YouTube. If we have a valuable piece of content you won't find it in the marketplace not being monetized."
Two marketers, JP Morgan Chase and Procter & Gamble Co., are already onboard, piggybacking on NBC's news, sport and entertainment video, which is being syndicated to the partners. Chase's VP-media buying and planning, Kristin Brown, said the financial institution will use the new syndicate to promote a new credit card being launched this month. Chase was offered the opportunity by its digital agency Avenue A, which appeared at a press conference today to champion the new initiative. "It's a good opportunity for distribution. We like to be on the cutting edge of new technology," she said.
"We see three principle benefits, there's a dearth of quality video online and not enough quality control," said James Warner, exec-VP Avenue A. "It increases the scale and reach of a number of sites. From an agency perspective, it makes it easier to buy. You can make a buy on NBBC and be on many sites."
The NBBC venture is a third-owned by the company's 230 affiliates that were brought on board in order to lock out competitors such as Yahoo and Google, which are looking to get a toe-hold in local ad markets. Local affiliates will provide the syndicate with local news and sports content.
While NBC executives refused to get into the specifics of revenue splits with its partners, the Financial Times reported yesterday that NBC Universal aims to double revenue from its digital businesses to about $1 billion by 2009, according to NBC Universal CEO Bob Wright. Estimated digital revenues for 2006 are $400 million.