WarnerMedia’s JP Colaco on Selling HBO Max With Ads

The upfronts week presentations have ended, and now it’s time for the real work: the negotiations. Adweek is sitting down with each of the ad sales chiefs who presented this week to talk about their respective events and their strategies for navigating this year’s marketplace. Following NBCUniversal’s Mark Marshall, Fox’s Marianne Gambelli , Discovery’s Jon Steinlauf and Disney’s Rita Ferro, next up is JP Colaco, head of advertising sales for WarnerMedia. His first upfront presentation for WarnerMedia last Wednesday unveiled new details about the upcoming HBO Max With Ads offering, which will be $9.99 a month when it rolls out the first week of June. Of course, the event was somewhat overshadowed by the earlier stunning news that Discovery and WarnerMedia would be merging, with Discovery CEO David Zaslav leading the combined company. Colaco, who arrived at WarnerMedia last October, declined to comment on the merger, but he did talk with Adweek about how it will affect upfront talks. The ad sales chief also shared even more details about exactly how HBO Max’s ad load will be the lightest in streaming and what marketers should expect in their first WarnerMedia upfront negotiations with him. This interview has been edited for length and clarity. Adweek: Let’s start with the WarnerMedia news that we can talk about: the specifics about HBO Max With Ads, which you announced at your presentation.Colaco: We’re super-invigorated about the fact that we're launching an ad-supported vehicle, which differentiates us from some of our competitors. When you give consumers choice, great things happen, which is that ability to scale faster as a company. And the idea that we're going to have the best-in-class ad load, coupled with the super premium content, all the 100 years of IP that we own and continue to create, and have advertisers have the opportunity to have an elegant, non-intrusive experience and drive efficacy, is an exciting value proposition as well. You’ve been quietly selling this over the past year, including in last year’s upfront. What has early demand been like, and how will you be selling it in this year’s upfront?The early demand has exceeded all expectations. The supply is lower than the demand, and that's a nice place to be. We signed a substantial amount of revenue in last year's upfront at very strong CPMs. Right now we're in the process of working with our agency partners—we signed almost all the top [holding companies] originally, and we're just activating those, and getting those brands on for launch. We’re extremely excited that we're going to have many, many brands on. The early demand has exceeded all expectations. The supply is lower than the demand, and that's a nice place to be.—JP Colaco, head of advertising sales, WarnerMedia How many?We're not sharing the number yet. But some services launched with less than 10; we are going to have a lot more than that. And we're very excited about the diversity that that's going to create, because we want to have a great advertising experience for consumers. Part of that is the ad load and controlling for frequency, but another thing is having a diversity of creative so that there's not a lot of ad wear-out, seeing the same ad over and over. So we're optimizing for both quality and quantity of ads. To answer your second question, we are packaging HBO Max With Ads in our upfront negotiations right now. And again, that demand is very high as well. So we're winning on both sides: in advance, we got a lot of demand. And now, as we scale, we'll know exactly how much inventory we have. But, based on our plans, we're selling the lion's share of the inventory in the upfront. HBO Max’s Ad-Supported Tier Will Debut in Early June at $9.99 a Month You said that HBO Max With Ads will have the lightest ad load in streaming, but a couple of your rivals make similar claims. What do you mean by “lightest ad load”?Well, I would say that we will have the lightest ad load in streaming, which is four minutes per hour as a maximum. And we've been public that, at launch, our HBO content will not have ads. So if you blend that, you’re actually going to have less than four minutes, because you will have some content without ads. The company announced that the “brand block” ad format will launch with the offering in June, while the pause ads and “branded discovery” formats will be “coming soon”? What’s the target rollout for those?We don't have a specific date right now, but it’s in the coming months. We have a very strong roadmap of ads and ad formats that we're creating to delight and engage customers, that are founded on research as well as intuitive sense. I always say this stuff is kind of half art, half science. And so we have a really great product team that's building great stuff. We wanted to get out of the gate, and you'll see a lot of acceleration and innovation in ad formats. With digital platforms coming very aggressively at linear companies this year, trying to get their ad dollars, it must be nice to be rolling out HBO Max With Ads.Linear is still an extremely important part of the advertising mix for us, and for others, and we are seeing very strong demand for linear inventory as we move into the upfront. All of the [digital] video, whether connected TV or mobile, can't match the reach that we have of linear. So we have the reach, we have the scale, we also have sports, and we just announced the NHL [TV package]. To answer your question, I'm very thankful that we continue to grow our digital footprint, because the way we see it is, one audience. And that audience can be linear, it can be digital, and we're selling that cross platform, because we can connect with consumers because of the amazing content we have, in a very effective way and at scale. And one of the things we talked about was addressable. We have linear addressability through our DirecTV platform., and we announced national addressability for our linear platform. We want to be in 52 million homes by the end of the year. So that's only going to drive more demand. It's this idea around getting the right ad to the right person at the right time. We are going to be able to be precise with linear, which is different and competes head to head with digital for efficacy. And we have eight years of experience doing this on DirecTV. We're the pioneer in the market, and we're just accelerating further from there. Another announcement your company made during the presentation was Front Row and TBS, and Front Row and TNT, which will air select content, including some HBO Max originals, with “limited commercial interruption.” Is that similar to the reduced ad loads that you already have for TNT originals, or will you be scaling those ad loads back even further?We don't have anything to announce today. But I think it will be a scaled back ad load. And part of this is also working with our advertising partners on how they want to shape the experience within the reduced ad load. It gives advertisers a way to actually be part of this content experience on a wide reach linear network, and then also on a scaling digital platform. WarnerMedia’s New Streaming-Centric Mantra After Restructuring: Be Consumer-First This will be your first upfront in your new role at WarnerMedia. What should marketers expect from you during negotiations, especially ones who haven’t worked with you before?Some of the things that they've seen [from WarnerMedia] in the past will continue, like a humility in terms of our approach: we're here to serve our customers and serve them in the best way possible. Second, we have tremendous ideas, and we have IP, and one of the things I talk about is IP is the new primetime. It's IP anytime, and you can actually consume content on your terms, on your platform, on your device. I think they can expect big ideas and openness to big ideas from them, and then working together, using our IP and our brands to work closely with them on big ideas. And flexibility is something that was a cornerstone of how we operated in the past. If you ask any of the agency holding folks, I think they would say that we were the most flexible partner during the pandemic. I think being a partner means in good times and bad times. The last thing I would say is that we are going to make sure that people understand the value of the entire offering, the breadth and depth of our portfolio of content. And we'll hopefully earn our share of advertising dollars in this upfront. What you can say about your early negotiations?The scatter market has been really strong. That's playing through into the upfront, and there is a tremendous amount of demand. A lot of our partners want to move very quickly, so it's moving faster than anticipated. So we're engaged and we're excited about the rapid pace that we're seeing in terms of placing dollars. I think people who wait right now in this frothy market, they may be left behind. A lot of our partners want to move very quickly, so it's moving faster than anticipated.—JP Colaco, head of advertising sales, WarnerMedia How will the merger news affect your upfront strategy and this year’s negotiations?It will not affect our upfront strategy in this year's negotiations. We're continuing to focus on driving the most value for WarnerMedia and AT&T in this year's upfront. Nothing changes. Will any upfront deals marketers make still be honored if the merger closes before the end of the upfront calendar? 100%, they will be honored. What is your top upfront priority?We want to increase our volume at better than market pricing, which seems pretty natural. But, but we also want to really have deep partnerships with the advertisers. That's really important to us. It's more than just spots and dots. It's a collaborative relationship where both sides are extracting a fair amount of value.

TV Upfronts

WarnerMedia’s JP Colaco on Selling HBO Max With Ads and His First Upfront at the Company

Plus, what the merger with Discovery means for this year’s negotiations

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