A lot of you have been asking about the latest developments surrounding Netflix and their ad supported model. Yes it’s coming, as reported by many, and we’re equally excited as you are! We wanted to take this opportunity to take a step back and “unpack” Netflix’s decisions and Why This Matters to You as a Programmatic Marketer:
- Why Ad Supported Now: Simply put, Netflix needs more $$. It spends over $17B on acquiring/creating content; that’s 2nd to Disney who spends $33B. Yes, Disney has Disney+, but remember they have a lot of ad supported channels: Hulu, ESPN, ABC, etc., all which help fund their content spending coffers. Netflix, Disney+ and Apple TV+ are really the only hold-outs when it comes to ad supported streaming services, but they’re all hinting at moving to an AVOD model. Netflix will be first.
- Choosing Microsoft As A Partner: THIS IS BIG! Many thought that Netflix would work with Google (a ‘walled garden’) in building their ad tech solutions. By choosing to work with Microsoft, they are de facto supporting The Open Web ecosystem. This is important to advertisers as it means they will have an objective buying opportunity when Netflix ad inventory becomes available.
- Data Applications: ANOTHER BIG ONE! It’s still early and our guess is that initially buying will be programming-based (much like TV), but our speculation is that data application to Netflix inventory could be available down the line. We are led to believe this because of Netflix choosing Microsoft/Xandr (formerly AppNexus SSP) to build their ad supported product. This tech stack is based on the open web and with it data activation.
- Measurable: THE MARKET WILL DECIDE… Ever wondered how many people stream Squid Game, Queen’s Gambit or Ozark? Yes, over the years Netflix started to release some self-reported numbers; our guess was to “prime the pump” of excitement for an ad supported future. Initially Netflix will be self-reporting these numbers but knowing that a majority of the TV market requires 3rd party attribution, we speculate this will shift based on demand.
- Available on open web DSPs (The Trade Desk, MediaMath, Amobee, etc.): We speculate that this isn’t a question of if, but when? There have been no announcements of when Netflix inventory will be available on CTV buying platforms, but we will make sure you hear of it 🙂
In a Hollywood Minute, This all matters to us as programmatic advertisers because we will have access to reach our audience within premium content… and that’s a wrap!
Want to talk about this topic or other programmatic news or even strategic questions? We’d love to hear from you: Marty@venturagrowth.com
