Quibi is getting $100 million in advertising from the likes of Procter & Gamble Co. and Progressive, but it’s investing in talent like Steven Spielberg to go up against the likes of Netflix, Amazon Prime, Apple and Hulu spending billions on their own productions. Even with “bite-size” content chunks and $1 billion in venture capital, that will get chewed up fast.
In an interview with Ad Age at Cannes, Quibi CEO (and former HP CEO and P&G board member) Meg Whitman addresses how she’ll handle the content arms race and relations with advertisers. Cash-hungry startup or no, she's not letting advertisers call all the shots.
For example, P&G Global Media Director Gerry D’Angelo said at an Innovid panel on Wednesday in Cannes that he’d like to avoid some of the problems with over-the-top video that plagued other digital platforms—like data-hogging “walled gardens.”
But Whitman isn’t prepared to open the walls just yet.
A hundred million dollars is a lot of money, but not when competitors are spending so much on original productions. How quickly are you going to burn through that?
We’ve said publicly we’ll spend $1.1 billion on content in year one. But we’ve said we’ll probably do another raise this fall of $500 million. There’s an axiom in business that when you can raise money you should, because you don’t know what’s going to happen to the economy or other things.
But this advertising is important for a couple of reasons. It’s a validation of our concept and our advertising platform with some of the most iconic and innovative brands. And we did it pretty fast.
How do the deals work?
We have eight or nine category-exclusive partners. P&G will be the only CPG company. Progressive will be the only insurance company. Studios are not like that, because all eight Hollywood studios are investors. They put in a substantial amount, and we couldn’t do a category exclusive for our investors. Right now, we’ve taken a pause to find out how much of the advertising inventory the studios would like, and that means we have room for two or maybe three more categories.
What do the advertisers get?
First, they’ll get associated with the launch of Quibi, which will be an enormous event the weekend before we launch [in April] to showcase their brands. Then there’s the ads on Quibi. Before every piece of our content, and remember the longest length is 10 minutes, there will be a 6-, 10- or 15-second pre-roll. That translates to about 2.5 minutes per hour, which compares favorably to 10 minutes on Hulu or 17 on network TV. We’ve also developed some unique advertising formats, and we wanted them in early to help us think through this.
We are telling brand stories in chapters. So, for example, they might have a 60-second spot divided into four 15-second pre-rolls. Our technology will allow us to follow you as a viewer, so if the first thing you launch is episode one of Vampire Tapestry, and the next is a Daily Essentials called news, and the third is a quick bite, you will see in chapters a Progressive story or P&G or Anheuser-Busch story.
We also have a “best of brands” category, where sponsors put their 3-to-5-minute content, with a trailer in front of each Quibi, and you can click the trailer and put it on the watch list. We’ve got a couple of other interesting formats up our sleeves. It’s a co-creation on ad formats.
Are category exclusives permanent?
Certainly in the first year. Then in a year [or] two, I suspect we will have category exclusives, and they will have right of first refusal. They will also have the right of first refusal of new countries we go to. This will ultimately be a global platform. …Our joint-venture partner in China is Alibaba.
I guess Amazon couldn’t advertise since they’re a competitor?
They can’t [but really just because of Walmart’s exclusive]. Now Hulu could advertise because they’re part of our studios. …We don’t think we’re competitive with these long-form OTT services. And even if we are, they’re advertisers.
Has your corporate background, including previously serving on the P&G board, helped close deals?
In some ways being on the P&G board was not an advantage. They wanted to have it at arm’s length. I was not the negotiator at all. Jeffrey [Katzenberg, Quibi founder] was.
Some marketers would very much like to prevent walled gardens from growing in OTT as they did in other digital and social platforms. Are you open to sharing data across platforms so they can do things like control how often individuals see their ads?
Not initially. We often say to people not now, and we’ll decide later. You have to remember that we’re a startup. And we want to make sure we can do what we say we’re going to do before we start adding other things. We understand the issue, but at least initially that won’t be something we do.
