What’s going on with Kayo’s advertising strategy?

Every Friday, Saturday or Sunday (sometimes Thursday) I watch my beloved Manly Sea Eagles.

It’s a long season. Before 2021 I very occasionally caught them in the pub. Traveling on Thursday and Friday nights usually saw me stuck in an airport lounge, spoiling my bad luck and choices as I dragged the dreaded Sydney-Melbourne route.

Today I am blessed with the wonderful service that is Kayo.

I can’t talk about it enough. It’s fast, the streams are fast and allow me to watch live sports virtually anywhere. It has changed the way I can watch my favorite sport. It’s addictive and often full screen on my TV when I’m (rarely) at home.

ADVERTISING

But there is one thing that baffles me.

Commercials.

You see practically every week I get caught up in a commercial break. In sports, I don’t care about them. They are usually fast and the ads are for products that I would usually buy. It’s never the end of the world.

It’s one of the few times I watch commercials on big screens.

Research agrees. ThinkTV (although slightly compromised in its independence) wrote an article in 2019 on this very topic.

Advertising during sport is not only good, it is very effective.

This brings me to Kayo’s current dilemma. In Kayo, there is often only a waiting pattern on the screen. “We are on a commercial break. We will be back right away.

Does that mean they have no ads to show? Seriously? Have advertisers gone mad?

Last time I checked, Kayo has around 1 million subscribers. I’m willing to bet maybe 200,000 at least must be NRL fans. That should equate to $4,000 per seat…at least. Maybe more. Yet Kayo seems unable to meet this demand.

Which give?

There are only three answers that make sense to me.

First, maybe Kayo isn’t selling ad space well. Streaming systems are new. I bet the delivery mechanics have some unavoidable issues in the way ads are displayed on screen. But if so, I would make Kayo a priority to fix this problem.

Second, ad buyers may not be buying Kayo inventory. If so, I would really question the logic here. All of this would indicate that advertisers are ignoring the value of BVOD assets these days (hint: if you’re in the marketing investment analysis game, you know that BVOD has high value and low inventory stock). If so, you need better analytics!

Third, it could be because Kayo doesn’t want to sell the ad space for some reason. I’d be puzzled as to why, but a potential answer could be a price floor. Kayo is simply unwilling to devalue space and set precedent, and therefore no advertisement is better than an advertisement.

I don’t know what the answer is (someone please from Foxtel put me out of my misery). But I would like to know.

This remains the biggest mystery of my days in advertising.

Henry Innis, co-founder of Mutiny