Every quarter a new analyst predicts the impending launch of ads on Netflix, typically followed up with other analysts reminding them that Netflix already has ads — native ads. Netflix has been quietly growing their product integration business for years. I wouldn’t be surprised if they started breaking out revenue shortly to assure Wall Street that they have diversified revenue.
What’s more, while Netflix is incredibly stingy with data, I’m sure they’re already sharing significant deidentified/aggregated data with the massive agencies buying native integration in their shows. These integrations are nothing new, but the [scaled] first party data generated around them likely doesn’t exist anywhere else.
Product placement is at the very top of marketers’ funnels, but have been essential at building brand loyalty for decades. Go watch shows from 20 years ago, and then go watch shows from 15 years ago and notice the massive increase in Apple products being used between the two periods. It now seems comical when a movie character is using off-brand technology because of how pervasive the iPhone has become, and that didn’t happen by accident.
Last week, Scroll (re)launched to offer users a $5/month subscription for ad-free websites. The technology is hardly impressive. In fact, the simplicity is the real genius behind Scroll.
When you have Scroll installed in your browser or on your phone, it sets a cookie. When you visit a website that Scroll has a contract with, this cookie tells the website to let Scroll bid on the ad space before anyone else. Scroll takes part of that $5 you pay, and they send it to the publisher directly along with their ad — or lack there of.
It’s that simple. Digital publishers agree to let Scroll pay them directly — no ad-networks — for their ad space before anyone else gets to bid on it. This is the business development product. What’s more, readers love not seeing blinking ads and publishers likely make more money without leaking user data to ad networks.
Netflix’ ad product sits at the very top of the marketing funnel, but they’re sitting on a massive trove of interest data. That’s gold for a performance marketer. Mix in 60M credit cards for all their logged in users, and you’ve got the recipe for a powerhouse ad-network.
Netflix doesn’t need to entice advertisers with content recommendation modules that game users into clicking them. They already have the largest agencies in the world banging on their door to see if Henry Cavil can somehow drink a Pepsi in an episode of The Witcher.
Netflix can quickly follow Scroll’s BD efforts and offer to buy publishers’ digital inventory for any logged in user. Instead of seeing 14 ads on the page, you might see two high impact ads for a brand that was quietly featured in a show you recently binged.
It’s a win-win-win-win
Netflix grows their ad revenue.
Consumers see higher-quality, less predatory ads.
Publishers get guaranteed revenue for 60M high-value readers without sacrificing their own first-party data.
Marketers get a simple, high-performing ad buy for getting consumers down the purchase funnel.
Through removing ads, Scroll may have demonstrated the way we can actually make digital advertising work for everyone: subscription services coordinating with private market places to let brands reach customers with high-value advertising on free content.
I call it NANA, the Netflix Ad Network Alliance.
What do you think?