Netflix is gearing up to allow ads and claims it could be the catalyst for a much bigger rethinking of how TV and digital advertising works.
Netflix admitted last week that this was the most inevitable thing in the media, that it might have to succumb to the gravitational pull of ad money.
Many people outside of ad tech decry “this is going to ruin my Netflix” and those in ad tech are ecstatic about all the first-hand data and reaching out to a group of “hard-to-reach” people.
However, Netflix will likely offer a few tiers, a (much?) more expensive, ad-free premium service, and perhaps a tier or two lower, subsidized with ad money.
The terabytes of proprietary data that Netflix has may not be particularly interesting. Knowing you watched three episodes of Ozark you stopped watching Love Is Blind at 23 minutes, what browser you use and where you live isn’t necessarily of great interest, in what was usually a context of reach and scope rather than accuracy.
What’s interesting are the questions it raises about how to monetize such an audience in the digital age.
TV advertising was born in an era of design restrictions that we have long since corrected. Ad breaks must be of a given length and frequency, ads are built on a 30-second format, ads are broadcast centrally and not narrowly targeted or inserted locally, and ads are not interactive in any way. Television advertising was expensive, it was wasteful, and thus, because of its inefficiency and reach, carried the scale and grandeur of credibility.
The digital age was based on other criteria: we had enough data, ads could be bought, created, and posted in real-time, ads were interactive and could lead somewhere, and the more we used the Internet, the more inventory we created, and as such, supply tended to meet demand, and prices were cheap.
Even when premium streaming came along, we saw ads that seemed lazy, TV ads ran online, and we didn’t see much enthusiasm other than adding new delivery specs and one more line to the media plan.
So the real promise for Netflix as an advertising platform is that it could make our industry finally challenge its assumptions. We can see the scale and potential of the platform, audience, and context of consumption and decide to invent new forms of advertising.