Netflix is set to revolutionize its advertising strategy by developing its own ad tech platform, aiming to enhance how advertisements are tailored and presented to its vast audience.
Announced at its Upfronts presentation, this initiative marks a strategic pivot from its initial partnership with Microsoft and places the streaming service in direct competition with established ad server providers such as Google, Amazon, and Comcast.
From Partnership to Independence
Previously, Netflix collaborated with Microsoft to fast-track its entry into the advertising arena, a move that allowed it to keep pace with competitors like Hulu, which has operated its own ad server for over a decade. However, the new direction towards an in-house ad server is a clear signal of Netflix’s intention to assert greater autonomy over its advertising operations and refine the user experience for its 270 million subscribers.
Amy Reinhard, President of Advertising at Netflix, highlighted the company’s commitment to maintaining high standards in its streaming technology. She emphasized the importance of strategic ad placement and the utilization of comprehensive consumer research to outpace competitors and provide value both to members and advertisers.
According to Reinhard, the shift to an in-house platform is about crafting ad experiences that are not only precise but also enrich the viewer’s experience, reflecting Netflix’s broader commitment to innovation and quality in every facet of its service.
The in-house technology is expected to move away from conventional, repetitive advertising models. Netflix is exploring “episodic” advertising campaigns that narratively link a series of ads, offering a storytelling element that aligns more closely with the content consumers are viewing.
Expanding Ad Buying Options
Further expanding its advertising capabilities, Netflix plans to incorporate new buying options this summer, partnering with The Trade Desk, Google’s Display & Video 360, and Magnite. This expansion mirrors a strategy also employed by Disney+, which has established a similar partnership with The Trade Desk.
The effectiveness of Netflix’s ad-supported subscription tier underscores the potential of this new strategy. Since its launch, the tier has attracted 40 million monthly active users worldwide, with 5 million joining within the first six months alone.
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Featured Image courtesy of Dado Ruvic/REUTERS