Digital Transformation

An ad-supported Netflix is just what the doctor ordered – here’s how to take advantage

By Amanda Martin | Senior VP of corporate development and strategic partnerships

May 23, 2022 | 6 min read

As the shape of streaming evolves, Netflix eyes ads. Even for channel novices, there are valuable opportunities to get in on the action, argues Goodway Group’s Amanda Martin.

After reporting a decline in subscribers in its Q1 earnings last month, Netflix has now confirmed it is looking to an ad-supported tier as its next big move – and it isn’t the only one. In March, Disney+ and YouTube each announced plans for bringing on – or, in Youtube’s case, extending – their ad-supported streaming options for customers, expanding into ad-supported video on demand (AVOD) and free ad-supported streaming (FASS), respectively.

Netflix logo on mobile device

Ad-supported streaming on a platform like Netflix unlocks a range of new capabilities

In the case of Netflix, an ad-supported tier presents an incredible opportunity for the company, if it’s able to draw on past successes to chart a new course forward. With video rentals, it was uniquely poised to disrupt the industry, given a lack of brick-and-mortar leases to hinder its innovation. Today, the streaming giant is in a similar position, with a non-traditional sales team likely to allow it to bypass much of the politics as it introduces ads. This alone could make the company a leader that top agencies and marketers want to work with. While this is great for Netflix, what does an ad-supported tier mean for brands?

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What an AVOD Netflix option means for marketers

Streaming services are embracing ads due to changing consumer behaviors including subscription fatigue and increased interest in free ad-supported alternatives.

But it’s also excellent timing for marketers who, in recent years, have had to contend with increasing competition for customer interest and consideration on and off the screen.

In the past, some marketers have been hesitant to allocate spend for digital channels such as connected television (CTV), where consumers flocked during the pandemic. But in the time since, video streaming has proven itself to be more than a fleeting trend. Netflix offers a tremendous opportunity for brands to leverage a new channel to reach and connect with a highly-engaged audience that is often inaccessible on traditional television.

There is significant power in branding, and Netflix has accumulated a wealth of brand goodwill over the years. This makes advertising on the platform equally compelling to marketers as the major moments on linear TV such as the Super Bowl, March Madness, the Masters and more. Netflix’s expansion into AVOD may be what tips the scales for marketing leaders who still think linear-first, prompting them to truly embrace non-linear channels.

While the prospect of incorporating Netflix into brands’ marketing plans is enticing, there are a few key questions and considerations that must be taken into account before diving in.

Jumpstarting your Netflix marketing strategy

To establish an effective plan for expanding their media mix to include Netflix’s AVOD platform, marketers need to assess whether investing in the channel will have a direct, positive impact on their brands’ bottom line. Here are a few ways brands can kickstart their Netflix marketing strategy.

Identify areas of opportunity

Ad-supported streaming on a platform like Netflix unlocks a range of new capabilities that will be invaluable to brands in an increasingly digital marketing landscape.

As legislation around data privacy continues to limit how brands can identify and personalize advertisements, first-party data is critical to brands’ success. Netflix has a rich supply of first-party data that can provide meaningful insights into who a brand’s customers are and what they are watching for more accurate targeting and, in turn, better campaign performance. As such, brands that lack first-party data may benefit tremendously from advertising on the platform.

Understand your consumer

When integrating Netflix’s ad-supported streaming into a brand’s media mix to extend reach and consumer engagement, marketers should ensure that they operate from a holistic perspective. This means taking stock of their consumer base and where they spend their time.

If, for example, the goal is to reach consumers of and over the age of 65, there may be better channels to allocate their spend, with consumers aged 18-64 making up the majority of Netflix’s user base.

Embrace trial and error

Marketers, especially those who are newer to the non-linear advertising space, have to get comfortable with taking risks. If Netflix or another AVOD channel seems like an excellent addition to a brand’s strategy, test it out. Shifting a small portion of their advertising budget to a new channel and closely tracking how it performs is an easy way for marketers to determine whether the move will complement their existing strategy. It also allows them to compare performance across different channels and prioritize the most impactful ones.

Netflix holds tremendous potential for marketers if approached correctly. Leveraging the platform does not require a complete overhaul of existing approaches, but rather the careful consideration of the platform’s benefits, the brand’s needs and a strong tolerance for occasional missteps. By keeping these tactics in mind, marketers can easily determine the value of such channels and how they can complement their current strategy.

Amanda Martin is senior vice-president of corporate development and strategic partnerships at Goodway Group.

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