NBCU Reaches Deal to Sell Ads on YouTube Videos, Including 'Tonight Show' Clips

By Mike Shields 

NBCUniversal has reached a deal with Google to sell ads for the first time alongside the media company's videos on YouTube.

This will mark the first time that ads will accompany clips from NBC's "The Tonight Show," which has become a viral sensation ever since Jimmy Fallon became the show's host in early 2014. NBCU will sell the ads itself.

Like other media companies, NBCU had held back from selling ads on YouTube over the past few years. While these traditional companies rarely commented publicly on their negotiations with Google, privately they voiced concerns about YouTube's standard ad revenue terms, which gives YouTube a 45% cut of the ad revenue and media partners the remaining 55%. Big TV companies, in particular, often balked at receiving the same ad revenue sharing terms as average independent YouTube creators.

NBCU, which is a unit of Comcast Corp., and Google declined to discuss any specifics about the ad revenue terms of the new partnership.

The pressure to reach a deal was mounting. When video clips went viral, the network didn't make a penny off them, and rivals recently started allowing commercials on YouTube. Just a few weeks ago, ABC reached an agreement to sell ads alongside clips from " Jimmy Kimmel Live" on YouTube. CBS has been running ads prior to clips of Stephen Colbert's new late-night show from the get-go. And NBCU itself had just established an elaborate distribution deal with AOL that included "Fallon" clips.

Linda Yaccarino, NBCU's chairman of advertising sales and client partnerships, declined to share any specifics on the deal, but implied that the company had been naturally headed in this direction given its ongoing embrace of digital media.

"Over time, it's not a coincidence, we've been able to form better partnerships," she said. "So strategically, this is a logical turn of events. You've see us make the AOL deal, and investing in Vox and BuzzFeed. So this makes sense. We are really getting aggressive in terms of getting our content to as many consumers as possible."

Regarding the YouTube negotiations specifically, she added, "Over a long period of time, between the two parties trying to figure this out, and with marketplace conditions [shifting], an opportunity emerged that made sense."

The new YouTube/NBCU deal includes selling ads on everything from clips of E!'s "Keeping Up with the Kardashians," to USA's "Mr. Robot" and NBC's "Late Night With Seth Meyers."

But the "Tonight Show" videos are the marquee property for NBCU to sell here. Mr. Fallon regularly posts videos from his show that generate millions, if not tens of millions, of views. For example, a recent Lip Sync battle featuring Ellen DeGeneres has generated over 12.6 million views in just a few weeks. NBC estimates that these clips will account for a 20% incremental reach for the show's linear TV audience.

Among advertisers, the demand for advertising in "The Tonight Show" is "literally insatiable," said Ms. Yaccarino. "There is not enough inventory to go around."

Write to Mike Shields at [e-mail]

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(END) Dow Jones Newswires

September 30, 2015 14:05 ET (18:05 GMT)

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