The National Advertising Division (NAD) of BBB National Programs has recommended Google’s YouTube TV stop certain ad claims that tout its live TV streaming service as significantly cheaper than cable.
Specifically, NAD decided YouTube TV should discontinue the comparative pricing claim in two commercials that say its service is “$600 less than cable” – following a challenge by cable operator Charter Communications. Without any promotional pricing or extras, YouTube TV costs $72.99 per month for a base plan that includes more than 100 channels.
Google is appealing the recommendation.
NAD examined and took issue with YouTube’s underlying calculations and comparison of the vMVPDs price to that of “comparable standalone cable” – which YouTube TV used as the comparison disclosure in the ads.
According to NAD, YouTube TV’s calculations included the cost of two set-top boxes per household for standalone cable. That’s something NAD, the advertising industry’s self-regulation and dispute resolution organization, found wasn’t a good fit for comparing price to cable in general, “since cable providers like Charter offer streaming options that may not require a set-top box.”
It’s worth noting that Charter executives have previously disclosed that two-thirds of its video sales are set-top box-less – meaning a streaming environment.
NAD also pointed out that in the dynamic and competitive TV market it may be difficult to identify “comparable offerings.” And NAD pointed to some shortcomings of YouTube TV programming compared to cable, specifically that in several markets cable operators offer regional sports networks (RSNs) but YouTube TV doesn’t.
“NAD determined that it is reasonable for consumers to believe that YouTube TV offers at least the same channels as cable for viewing basketball,” NAD said in its announcement regarding the decision.
While NAD is telling YouTube TV to stop the $600 less price comparison, it did note the decision doesn’t stop Google from making other non-misleading claims comparing the live streaming TV service’s price to that of any cable provider.
Google for its part stated that it “unequivocally disagrees” with the decision and NAD’s “interpretation of ‘comparable’ offerings.” Google plans to appeal because the company “believes that consumers broadly understand the difference between traditional cable and streaming and that they do not interpret ‘cable’ or ‘standalone cable’ offered via a ‘cable box’ as encompassing streaming services, regardless of who provides them.”
YouTube TV is the leading virtual MVPD, adding an estimated 200,000 subscribers in Q2 for a total base of around 5.9 million, according to Leichtman Research Group.