NBC raked in nearly $1 billion in ad sales from digitally native brands during its 2019 Upfronts — showing how quickly DTC brands are turning to TV to scale

  • A big chunk of NBCUniversal’s Upfront ad dollars came from digitally native and tech companies, executives said during parent company Comcast’s second-quarter earnings.
  • These companies represented NBCU’s largest buying category, contributing nearly $1 billion in total sales during the Upfront.
  • Comcast EVP and NBCUniversal CEO Steve Burke said the uptick was interesting, given those companies “literally didn’t advertise four or five years ago.”
  • TV companies including NBCUniversal are increasingly catering to direct-to-consumer brands with teams and products aimed at their performance-oriented needs.
  • Click here for more BI Prime stories.

Digitally native brands are not only fueling their own growth, but also the growth of legacy TV companies like NBCUniversal.

During its second-quarter earnings on Thursday, parent company Comcast broke down how the largest driver for NBCUniversal’s 2019 Upfront was the growth in spend from digitally native companies, including direct-to-consumer upstarts and the FANG companies Facebook, Amazon, Netflix and Google.

Digitally native and tech companies represented NBCU’s largest buying category, contributing nearly $1 billion in total sales during the Upfront — an increase of 25% in sales volume compared to last year’s Upfront, according to the company. Four of NBCU’s top 25 spenders overall come from this category, it added. NBCU said its portfolio volume (including the Olympics) neared $7 billion, up 10% year-over-year in volume.

“This year was particularly robust…and a variety of things drove that,” said Steve Burke, EVP at Comcast and CEO of NBCUniversal during the earnings call. “Maybe the most interesting is that now the biggest category of advertising in our Upfront is from companies that are digital native companies — the FANG companies, Peloton, streaming businesses, businesses that basically exist on the internet.”

“Ironically, these are the businesses putting some pressure on our ratings, but interestingly those businesses find television advertising very, very effective,” he continued. “And because they’re so data-oriented, they can measure the impact of television advertising. So well over $1 billion came from digital native companies that literally didn’t advertise four or five years ago.”

DTC companies are increasingly buying TV advertising, and networks are responding

DTC and digitally native companies that built their businesses on social media have become a fast-growing but small segment of the $70 billion TV ad market as they’ve started buying TV ads to scale their businesses. DTC companies spent $2 billion on TV in 2018, according to the Video Advertising Bureau. The number of DTC brands running ads on national TV hasnearly doubled in the past two years, according to MediaRadar.

Read More: Direct-to-consumer brands that built their businesses without traditional advertising are now embracing it in key ways to fuel growth

Legacy TV companies including NBCUniversal, Viacom, and CBS have built teams to cater to this fast-growing sectorwith pitches that emphasize data, content, and audience, and their digital targeting capabilities.

NBCUniversal, for its part, has a 10-person team dedicated to DTC advertisers, and is working with 150 DTC companies, Laura Molen, president of ad sales and partnerships at NBCU, told Business Insider earlier this year. It has created a shoppable TV product that promises a way to make a direct link from advertising to sales and also sells advanced advertising that lets these companies pinpoint audiences that are good targets for their products.

Read More: NBCUniversal and CBS are building teams to go after direct-to-consumer dollars, but startups still think TV is too expensive

In terms of where these digitally native budgets are heading, NBCU said that its largest digital native clients spent 92% of their buys with the company on linear TV.

Get the latest Google stock price here.

Source: Read Full Article