Netflix and the biggest opportunity ever in advertising
As Netflix finally prepares to allow ads, everyone's talking about what they could do with its mountains of first-party data. But forget that, says Tom Goodwin, who instead argues this could be the catalyst for a much bigger rethink of how TV and digital advertising works.
After years of rumors, ads are finally coming to Netflix / Adobe
In what’s been the most inevitable thing ever in media, Netflix admitted last week that it may have to succumb to the gravitational pull of advertising money.
Predictably we saw lots of people outside adtech decry “this will ruin my Netflix” and those in adtech get excited about all the first-party data and reaching a tranche of “hard to reach” people.
The truth is a little more boring and less dramatic: it’s likely Netflix will offer several tiers, a (much?) more expensive premium totally ad free service, and perhaps one or two tiers below, subsidized by ad money.
The terabytes of first-party data Netflix has may not be especially interesting. Knowing you watched three episodes of Ozark, you stopped watching 23 mins into Love is Blind, what browser you use and where you live isn’t necessarily of massive interest, in what has typically been a context for reach and scale, not precision.
What is interesting is the questions it raises about how to monetize such an audience in the digital age.
TV advertising was birthed in an era of design constraints that we fixed long ago. Ad breaks should be of a set length and frequency, advertising was built on the 30- second format, adverts were broadcast centrally, not narrowcast, or inserted locally and adverts were in no way interactive. Advertising on TV was expensive, it was wasteful and thus intrinsically through inefficiency and reach, it carried the scale and grandeur of confidence.
This gave rise to TV’s use as a way of building brands and brand awareness; it became a medium for large mass market brands to assert dominance. It suited the largest advertisers in the world to tell a passive plethora of consumers about a new fabric softener, get them to want a pizza from you, or reinforce trust in a bank or car insurance company.
The digital age was founded on different criteria: we had ample data, ads could be bought, made and inserted in real time, adverts 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 tended to be cheap. So platforms created self-serve models, allowing anyone to do ad buying themselves, and thanks to an auction system, at the same rates as the largest companies on the planet. In this model advertising became accessible to the smallest of advertisers, anyone with a credit card and Facebook account.
For reasons I’ll never understand, because we had all this data, because we COULD track how people responded and because ads COULD be interactive, we assumed the only possible form of advertising for the web-served screen would be performance ads. Despite billions of people spending countless hours gorging on tiny screens, we presumed every ad should be targeted as precisely as possible, we presumed every ad needed to command us to “find out more” , we presumed every ad that didn’t get clicked on failed, and every click, regardless of intent, was responsible for the entirety of any good that ever happened after, even buying a car.
Even when premium streaming came along, we saw advertising that felt lazy, we took the same ads from TV and ran them online often incessantly, we saw little enthusiasm beyond adding new supply specs and another row to a media plan. We saw some video ads created with lower production budgets and that gave up on the potential for a new more premium context than video ads before.
So the real promise of Netflix as an ad platform is it may get our industry to finally challenge assumptions. We may see the scale and potential of a platform and audience and consumption context, and decide to invent new forms of advertising.
We could make ads that both aid brand building and offer a chance to push people further down the sales funnel. We may create new journeys where advertising on large screens links with action on our phones,
We may serve ads sequential units, that build over time. We may finally see frequency capping. We could see units placed in real time responding delicately to the weather or news events, or local inventory levels. We could place ads not by dodgy audience data , but by viewing context – what should an advert feel like in Bridgerton vs Too Hot to Handle?
More than anything else I want us to avoid the trappings of the past. We need to escape the pressure to use dodgy data to make assumptions about targeting that assume more precision that we can realistically deliver against. We need to stop media being so cheap that players don’t think value and respect the importance of the attention of the viewers and move to maintain production values. We need to avoid the desire to bombard and harass and instead seek to seduce, intrigue and inform.
This is a great time for us to be a little more imaginative, a little more ambitious and a little more proud. A time to challenge the precedents and assumptions of the past. To make adverts and exploit other commercial opportunities on a great platform for entertainment and to do so, by challenging what we think we know.
We’ve all been told TV is dead for years, but nothing could be further from the truth. We watch more TV than ever, it’s just not on TVs, from TV. Let’s make advertising for the future.
Tom Goodwin is a consultant, speaker and writer. Follow him on Twitter @tomfgoodwin and check out the Future of TV hub/subscribe to the newsletter here.