Netflix offering advertising opportunities… if you’re a traditional broadcaster, your first thought was probably “Sh*t, here we go again. Another competitor.” If you’re a marketer, your first thought might be “finally.” My teams and I were some of the first to rollout an ad-supported streaming option in 2015 and the first question we would get was “Will my commercials be on Netflix?”. The answer then was “no”. Today, 7+ years later, the answer will finally be “yes”. Netflix's CEO recently confirmed that the service will soon allow ads on its streaming service. What does this mean for businesses and the ad community?
No one has seen a media kit from Netflix yet, but we can assume some of the benefits that will be appealing to advertisers. The first being data. In today’s world, it is certainly important to protect one’s data. Companies like Facebook, Google, and Apple have all taken steps to make it easier to do so. However, data is a marketer’s friend. Using data (which has been anonymized) to identify the best customer behaviors and demographics saves marketing and ad budgets, eliminating or mitigating waste, and just makes sense. Fast-forward a couple of years since data protection became an issue and we consumers aren’t always opposed to marketers using data to deliver relevant ads to us. Examples being the newly married couple, starting out their lives together is ok being served ads that fit their lifestyle and vice-versa for the empty nesters who would probably don’t need to be served ads showing diapers.
Here is one more note on data. Netflix’s data is/will be pristine, untouched by a device or outside company limiting its access. As noted above, Google and Apple have put in new data protection safeguards which makes targeting more difficult. Facebook got into a little trouble for how it used (shared) its data on users. But Netflix has been gathering data on its subscribers for years and, as far as we know, it has been a sealed universe. Opening it up now gives us another great source to target the right consumer, at the right time.
Amazon has recently opened its ecosystem up to the ever-changing marketplace of advertising and has set a precedence for Netflix. Companies advertising on Amazon and consumers seem to be pleased with the results so far. Amazon’s ad growth has surpassed other ad supported platforms that have been doing it for decades and it now ranks third in the digital advertising revenue, just behind Facebook and Google. Granted, Amazon had scale when it opened up its “sealed” universe to an ad supported model. Netflix might be the next closest platform that could match Amazon’s scale and success in this space.
Another benefit will be Netflix’s reach. No one streaming service has entered the ad market with over 70 million subscribers (US & Canada). These are big numbers. However, their reach goes beyond just the number of households that use their service. Their content is still in high demand. Recent hits like Stranger Things, Ozark, and Bridgerton have all proved that. Others will tout reach but content is still king. This combo of large number of households using Netflix and the content they are producing will be good for advertisers.
Large national and global brands will jump on board first as they will get the first-look opportunities. I’d expect a slower rollout to the local markets. But Netflix will eventually reach Main Street. Every digital ad-supported universe, Google, Facebook, Amazon, etc. all make a large percentage of their ad revenue from local markets and local companies advertising. It’s the small-to-medium sized businesses that will eventually make this work for Netflix.
Will it be good for your company?
Netflix will bring new opportunities to the ad market. Using it will be a benefit and a nice addition to most business’s ad strategies. It won’t be a silver bullet that cures all, but no one can deny that another option in targeting the right consumer is good thing.
If you’re a business leader and this another confusing piece in an already confusing space, let’s connect. We can help you determine what’s right for you company and goals. Connect here.