WarnerMedia has started pitching advertisers on its flagship streaming service HBO Max.
WarnerMedia has told ad buyers that it plans to roll out HBO Max’ ad-supported tier in the second quarter of 2021, according to agency executives who have been briefed on the matter. One of the agency executives said that WarnerMedia has left the door open to debut the ad-supported tier in the late first quarter in time of the NCAA men’s college basketball tournament, which partially airs on WarnerMedia’s TV networks. A WarnerMedia spokesperson declined to comment.
WarnerMedia’s HBO Max ad pitch has been relatively light on specifics, according to the agency executives. “It was part of our upfront discussions [with WarnerMedia], but it’s all pretty loose because there weren’t a lot of details on it,” said one agency executive. The company has set an asking price for its initial advertisers and shared how many ads the streamer will air per hour of programming. However, the company has not told the agency executives whether people will have to pay to access HBO Max’s ad-supported tier.
When HBO Max’s ad-supported tier does launch, it will carry a maximum of four minutes of ads per hour for episodic programming and two minutes of ads per hour for movies, according to the agency executives. That is a lighter ad load than traditional TV, which typically airs roughly 16 minutes of ads per hour. Streaming services have cut down on ad time seemingly in recognition that an overabundance of ads is a major reason why people have cut back on traditional TV watching. NBCUniversal’s Peacock, for example, carries five minutes of ads per hour.
The company is asking that advertisers spend at least $250,000 per quarter, according to the agency executives. “The cost of entry is really low,” said a second agency executive. However, WarnerMedia is setting high CPMs for its ads, so that $250,000 may not go so far. The company is setting the CPMs at the agency level, so the executives declined to discuss specifics but said the CPMs are in the range of CPMs for primetime broadcast TV shows, which can hover around $80. As a result, the lower commitment may make it easier for HBO Max to attract a large number of advertisers, but the high CPM is likely to lead some advertisers to wait until they have a better sense of what they would be getting in return for that money, said a third agency executive.
WarnerMedia is taking a different tact in pitching its streaming service than NBCUniversal did when lining up advertisers for its Peacock streamer. Instead of seeking out a small number of exclusive launch sponsors that would pay tens of millions of dollars, WarnerMedia is looking for a broad array of advertisers to run ads across HBO Max. To that end, the company is aiming its pitch at agencies that will then identify particular clients to advertise on the service.
There appear to be two main reasons why WarnerMedia would still be ironing out HBO Max’s advertising pitch. For starters, WarnerMedia may not be able to sell ads against some of HBO Max’s top programming. According to The Information, new episodes of HBO shows distributed through HBO Max will not be able to carry ads because of HBO’s agreements with pay-TV providers as well as WarnerMedia executives’ concerns that inserting ads in those shows could hurt the HBO brand.
Additionally, the streamer is not yet available on two of the biggest connected TV platforms, Amazon’s Fire TV and Roku. That has drawn questions from agency executives about how many people they can expect to reach when the ad-supported tier debuts. “If you launch a platform and you’re not on Amazon and Roku, did you actually launch?” said a fourth agency executive.
How YouTube is calculating creators’ ad-revenue shares for Shorts
Calculating how YouTube Shorts ad revenue will be split is more like doing taxes than basic arithmetic, as this video explainer breaks down.
Disney plans to extend Hulu’s ad targeting options to Disney+’s ad tier
Disney ad boss Rita Ferro said the company expects to reach its goal of automating 50% of its ad sales this year.
Future of TV Briefing: TikTok’s revenue-sharing terms are turning off some creators
This week’s Future of TV Briefing looks at the language inside TikTok's revenue-sharing terms that has creators concerned.
SponsoredHow ad tech is tackling waste by optimizing supply chains
Sponsored by Bidtellect The programmatic and digital advertising industry is well aware of the inefficiencies in buying and selling — from auction duplication and volume bias to multi-integrations and reselling — but how did it get this out of control? How can we fix it? A redundant, multiple-step process to ad delivery has become the norm, […]
Future of TV Briefing: Smart TV makers seek to steal the screen
This week’s Future of TV Briefing looks at how Roku's push into the smart TV manufacturing business reflects the changing state of the connected TV market.
Why TV advertising’s upfront model won’t fade away
Despite the financial confines of the upfront’s year-long commitments, TV ad buyers and sellers continue to seek economic comfort in the upfront model’s revenue guarantees and pricing assurance.