How Procter & Gamble's quest to save ad-supported video shaped the evolution of Quibi

For more than a quarter century, Procter & Gamble Co. has been trying to save ad-supported media. The rise of subscription models and decline and fragmentation of TV audiences show this has been an uphill fight. And one problem, as Chief Brand Officer Marc Pritchard acknowledged last year, is that today’s leading digital platforms were launched without much input from, or thought, about advertisers.

That’s not the case with Quibi. This became clear when Pritchard interviewed Jeffrey Katzenberg, chairman and founder of the soon-to-launch streaming service of bite-size video chunks designed for mobile phones before a small audience that included P&G Chairman-CEO David Taylor and other executives inside the company’s CES exhibit this week.

Not only was P&G the first advertiser to sign up for Quibi—one of 10 collectively pledging $150 million earlier this year—but Pritchard detailed the role he played shaping the streaming service’s ad-supported offering almost from day one, going back two and a half years and well before its announcement. That includes talking Katzenberg out of his original preference for 6-second ads in favor of 10- to 15-second pre-rolls.

Pritchard’s input started when Katzenberg handed him a book that looked like a photo album with boards for all the creators he expected to work for Quibi. Pritchard describes his reaction as “’Oh My God!’ Because he knows everybody in Hollywood.” After the pitch, Pritchard says he told Katzenberg: “You had me at hello.”

That happened in 2017, before P&G board member and alum Meg Whitman became CEO of Quibi in 2018. She’s required to keep an arm’s length relationship to the P&G business, given her board membership.

But certainly P&G stays in the loop. The Turnstile technology that enables video to seamlessly flip from horizontal to vertical aspects—because creators film both versions in the same shoot—was shown privately to P&G at its Signal digital conference in Cincinnati before it was unveiled publicly at CES this week.

Pritchard is a believer among many skeptics in a service that’s often lost in the publicity melee of rapidly expanding OTT (or, over the top) video. Quibi has a long way to go to rival Netflix, Hulu, Amazon Prime or Disney. And Katzenberg acknowledged that, unlike competitors, Quibi started with no content library. It’s all being made from scratch, because Quibi’s fundamental premise is to be seen almost entirely on mobile phones, and he says no existing TV or film content has been created with the aspect ratios, time formats or other technology to optimize for the small screen.

Quibi will be putting out 180 minutes of original content every day, 52 weeks a year, after it launches in April, Katzenberg said. By comparison, a broadcast network produces 135 minutes, 40 weeks a year, for primetime, he said.

And Quibi’s minutes will be costly. YouTube creators like his personal favorite, Dude Perfect, spend about $2,000 per minute on production, Katzenberg said. Quibi is going for the $100,000-a-minute Hollywood model, enlisting the likes of Steven Spielberg, Guillermo Del Toro, Antoine Fuqua, Catherine Hardwick, Reese Witherspoon and Idris Elba. Some content will be a tad cheaper, such as a daily “Best of Late Night” segment that curates comedy from 22 late-night TV shows daily.

It all amounts to what Pritchard has been seeking for years from his bully pulpit as chief marketer of the world’s biggest advertiser (once again) and chairman of the Association of National Advertisers: content that appeals to millennials and younger, but with old-school production, business and editorial values—brand-safe, with minimal clutter and verified audiences.

Katzenberg says he will deliver all those things with the ad-supported service, which costs $4.99 a month. Quibi also has a $7.99 ad-free offering, but he expects 70 to 80 percent of people to sign up for the ad-supported option. They’ll see one 10-second ad in front of each video of 5 minutes or shorter, and one 15-second ad for longer videos.

“If you watch an hour of Quibi, you will watch two and a half minutes of commercials,” Katzenberg said. “If you watch an hour of broadcast TV, you will watch 17 and a half. If you’re on Hulu, Spotify or Snapchat, you’re watching 10 minutes.”

Certainly that’s part of the appeal for P&G, which is also working to create ads that are “organic” to Quibi, Pritchard said, including using Turnstile and trying Katzenberg’s “chapters” format, where a 60-second ad broken into 15-second segments follows viewers until they’ve seen the whole thing.

Getting this kind of focus on advertiser needs at the outset from a digital platform has been a largely unrealized dream for P&G since Chairman-CEO Ed Artzt delivered his famous speech to the 4As in 1994, warning that ad-supported TV was in peril and arguing for advertisers to get involved in the market to save it. What’s happening with Quibi is exactly that, albeit not the exact solution that Artzt, who talking about interactive TV at the time, had envisioned.

Pritchard went to great lengths to outline why he thinks Katzenberg will succeed. He spent five minutes on his resume, from rescuing the Star Trek franchise at Paramount with the 1979 movie to founding DreamWorks Animation.

“I have never heard of someone who has had such an incredible 40-year history of success,” Pritchard said. “Pretty much everything Jeffrey has touched has worked.”

Katzenberg was equally effusive about P&G, saying he went there first with Quibi because “P&G is the greatest advertiser in the world. …As [P&G] goes, so goes the rest of the ad community.”

“Now we need to live up to that for sure,” Pritchard said.

Katzenberg acknowledged that consolidation is inevitable amid the current explosion of streaming services, which he likened to a Las Vegas breakfast buffet, where people love all the offerings but come away feeling uncomfortably stuffed. But when people moderate their habits the morning after, he expects Quibi to remain on the plate.