Last week, HBO Max announced its new ad-supported tier, which will become available in June at $9.99 per month. The current $14.99 ad-free tier will still be available. Now, JP Colaco, head of advertising sales at WarnerMedia, is chatting about the new tier and what it means for HBO Max going forward.
In an interview with Adweek, Colaco seemed optimistic about the future of the streaming service and the power of this new move. He said, “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.”
As for what the ads will look like, Colaco says there’s a focus on both quantity and quality. The company hopes to avoid “ad wear-out” and doesn’t want consumers to see the same few ads too many times. In addition to focusing on both the variety and type of ads included in the tier, the company wants to keep them to a minimum. Colaco argues that, despite other companies promising the “lightest” ad load, HBO Max will be the one to deliver that. He says that the service will only show four minutes of ads per minute. This will end up being even lower though, as HBO content will not feature ads at all.
So far, the idea has been catching on as the company has slowly sold the ad-supported tier in last year’s upfront, as well as this year’s. It’s been a great success already. Colaco said, “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.”
As the company continues to negotiate, they are already including the ad-supported tier of the streaming service. In the interview, Colaco added, “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.”
He shared a little bit about the priorities the company has when working on ads and marketing, saying, “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.” Though Colaco only joined WarnerMedia in October, he already has high hopes for what’s to come from the company.