What is going on with Kayo’s advertising strategy?

Confused by Kayo Ads, Mutiny's Henry Innis writes about the "biggest mystery" in advertising.

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

It’s a long season. Before 2021, I used to catch them very occasionally at the pub. Travel on Thursday and Friday nights usually saw me stuck in an airport lounge, ruing my poor luck and choices as I drudged through the dreaded Sydney-Melbourne commute.

Today, I’m blessed with the wonderful service that is Kayo.

I can’t speak highly enough of it. It’s quick, streams fast and lets me watch live sport virtually anywhere. It’s changed the way I can watch my favourite sport. It’s addictive and often full screen on my TV when I’m (rarely) home.

But there’s one thing that baffles me.

The ads.

You see virtually every week I get caught in an ad break. In sport, I never mind them. They’re usually quick and the ads are for products I usually would buy. It’s never the end of the world.

It’s one of the few times I actually watch ads on large screens.

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

Advertising during sport isn’t just right, it’s very effective.

That brings me to the current Kayo dilemma. In Kayo, there’s often just a holding pattern on the screen. “We’re in an ad break. We’ll be right back.”

Does that mean they don’t have ads to show? Seriously? Have advertisers gone mad?

Last I checked, Kayo has some 1m subscribers. I’m willing to bet maybe 200,000 at least must be NRL fans. That should equal $4,000 per spot… at least. Maybe more. Yet Kayo seems like it’s unable to fill that demand.

What gives?

There are only three answers that make sense to me.

Firstly, maybe Kayo isn’t selling the ad space well. Streaming systems are new. I’m betting the delivery mechanisms there are inevitable stuff ups in how ads are put on the screen. But if that’s the case, I’d be making it a priority at Kayo to sort that problem out.

Secondly, it could be that ad buyers aren’t buying Kayo inventory. If that’s the case I’d genuinely question the logic here. All that would point to is advertisers being unaware of the value of BVOD assets these days (hint: if you’re in the marketing investment analytics game, you know that BVOD is high value and low on inventory stock). If that’s the case, you need better analytics!

Thirdly, it could be because Kayo doesn’t want to sell the ad space for some reason. I’d be baffled as to why that was, but a potential answer could be a price floor. Kayo simply isn’t willing to devalue the space and set a precedent, and hence no ad is better than an ad.

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

It remains the greatest mystery of my days in advertising.

Henry Innis, co-founder at Mutiny


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