Netflix's Ad-Venture Pirates, Pitches, and Popcorn!
Netflix's Advertising Odyssey: From Password Pirates to Advertisements and ARRRPU! Netflix, the trailblazing streaming giant, has been revolutionizing the
entertainment industry for years. In its Q2 earnings report for 2023, the company demonstrated its continued prowess in attracting subscribers and flexed its muscles in its foray into advertising. Despite the impressive growth in its subscriber base and the potential for a lucrative advertising business, there are still hurdles to overcome. This article takes a deeper dive into
Netflix's Q2 earnings call, examining the factors driving its success, the challenges ahead, and the long-term potential of its advertising endeavors. The Surge in Subscribers Netflix's Q2 earnings report revealed a remarkable rebound in subscriber growth, with 5.9
million new paid subscribers added during the quarter. This impressive turnaround came after the company had experienced a dip in its subscriber numbers the previous year. One of the key drivers behind this resurgence was Netflix's aggressive campaign against password sharing. The crackdown on password sharing is yielding positive results for Netflix, as sign-ups are now outpacing
cancellations. With a global subscriber base of 238 million, the company's efforts to enforce its policy across over 100 countries, including 80% of its revenue base, have paid off. This success has given Netflix confidence that it can maintain its strong subscriber growth trajectory. The Advertising Push Netflix made a bold move by introducing its ad-supported tier in partnership with Microsoft, despite previously denying any intention to enter the advertising business. The decision has proved strategic, as subscribers on the ad-supported tier nearly doubled during Q2, and more than 5 million members have already signed up for ad-supported plans. However,
Netflix is candid about the current state of its advertising revenue. While the growth in ad-supported memberships is promising, the revenue generated remains relatively small in the context of Netflix's overall business. The company acknowledges that building an ad business from scratch is a challenging endeavor. Netflix has a long way to go before advertising becomes a substantial contributor to its revenue stream. Challenges Ahead Netflix faces several challenges in its pursuit of a lucrative advertising business. The ad-supported tier's user base is still relatively small, constituting only 2% of its approximately 75 million U.S. subscribers. The company aims to capture more brand-focused linear TV ad dollars and eventually tap into the digital ad
spending market. However, achieving these goals will require innovative strategies and steady growth in its ad-supported membership base. Additionally, while the ad-supported tier shows higher average revenue per user (ARPU) compared to ad-free plans, ARPU has experienced a slight decline year-on-year. This trend underscores the need for Netflix to attract more users to its ad-supported plan
and demonstrate consistent growth in ad revenue. The Basic Plan Cut and Advertising Expansion In a strategic move to drive subscriptions to the ad-supported service, Netflix decided to eliminate its lowest-cost ad-free option, the Basic plan, for new members in the U.S.
and UK. This step aims to nudge subscribers towards the ad-supported tier, which offers an appealing price point at $6.99 per month. Netflix is making efforts to expand its advertising offerings. It plans to target ads around its top 10 performing titles each day, providing advertisers with a unique opportunity to participate in the most popular shows and films on the platform. However, the
company has been tight-lipped about sharing updates on the progress of its advertising features and its own ad tech stack. Long-Term Potential Despite the current challenges, Netflix remains optimistic about the long-term potential of its advertising business. The
company emphasizes that it is still early days for both advertising and paid sharing initiatives. The crackdown on password sharing is expected to have an ongoing positive impact on subscriber growth, while the ad-supported plan is projected to continue doubling in sign-ups each quarter. Netflix's CFO, Spencer Neumann, expressed confidence in the company's ability to develop advertising into
a multibillion-dollar incremental revenue stream over the next several years. As the streaming giant continues to innovate and add more features to its advertising offerings, advertisers and investors will be keenly observing its progress in the competitive advertising landscape. Netflix's Q2 earnings call showcases the company's unwavering commitment to growth and innovation. The surge in
subscribers and the success of the crackdown on password sharing reflect Netflix's ability to adapt to the ever-changing entertainment landscape. The introduction of the ad-supported tier demonstrates Netflix's willingness to explore new revenue streams. However, the company acknowledges that building a significant ad revenue stream from scratch will take time and effort. The small current
size of the ad-supported user base presents a challenge, and Netflix must continue to work on attracting more subscribers to this offering. As Netflix continues its journey to develop a multibillion-dollar advertising business, the path ahead may have bumps, but the streaming giant's track record of innovation and resilience suggests it has the potential to reshape the advertising landscape
in the years to come. Advertisers and investors alike eagerly await Netflix's next moves in the pursuit of advertising success.
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All the news you need today, in a format that isn't TL:DR, summarized for the busy executive.
🌿 Multilocal, the supply-side expert, has launched a low carbon marketplace in partnership with carbon intelligence platform Cedara, offering clients worldwide the ability to measure and optimize their processes to reduce carbon emissions. Sustainable advertising is gaining momentum, and Multilocal's Green
PMP deals aim to address the environmental impact of advertising campaigns, which generate 215k tonnes of carbon monthly. By leveraging Cedara's methodology, Multilocal can benchmark carbon contributions for individual businesses and the wider industry, curating PMPs from eco-conscious publishers. This innovative approach aligns with the growing awareness of carbon emissions and sustainability efforts in the advertising world, providing opportunities for more efficient programmatic media buying
and reaching eco-conscious consumers across various verticals.💚📈
🌱 Today marks the launch of the Responsible Marketing Agency, a pioneering specialist aiming to support media, digital, and marketing clients in achieving sustainable growth through responsible and progressive practices. The agency's ethically-minded team will guide brands, agencies, and publishers in implementing environmental, social, and governance (ESG) roadmaps and KPIs aligned with the United
Nations Sustainable Development goals by 2030. In response to the growing awareness of sustainability challenges, the Responsible Marketing Agency offers flexible service models, covering advisory, enablement, strategy, and partnerships. Founder Hannah Mirza, with her extensive experience in the industry, is determined to help clients navigate the complexities of ESG and drive positive societal impact while ensuring business growth. In a media world grappling with its role in the climate crisis,
the agency seeks to empower marketers to create meaningful change and progress. 🌍🚀
The digital advertising landscape has experienced significant changes in just under three years, particularly with the launch of Apple's App Tracking Transparency and the impending elimination of third-party cookies in 2024. This shift has led to the emergence of "signal loss," which affects personalization, look-alike modeling, audience targeting, and more.
Marketers are facing challenges in finding reliable data sources for targeted marketing, but offline data, such as matching individuals' names to mailing addresses, emerges as a potential solution. Offline data offers greater accuracy and reliability, reflecting consumer behaviors and preferences in physical locations, making it a valuable tool for precise prospecting and campaign success.
A new advocacy group called the "Coalition for Local
News" has been formed by independent broadcasters representing over 600 local ABC, CBS, Fox, and NBC television stations. The group aims to reform retransmission consent rules so that they apply equally to traditional and upstart pay television systems, including streaming services like Google-backed YouTube TV and Disney's Hulu with Live TV. The broadcasters argue that the current rules favor streaming upstarts and networks while leaving them at a disadvantage in negotiations. They are
seeking a level playing field and control over their local news programming in the evolving digital advertising landscape. The coalition's participants include major broadcasters like Nexstar Media Group, E.W. Scripps Company, Gray Television, Allen Media Group, Cox Media, and Sinclair, Inc. They aim to protect local broadcast news and ensure fair treatment in the industry's transformation.
📺🚀 Peacock, NBCUniversal's streaming service, is implementing its first-ever price
hike! Starting August 17, existing customers will see Peacock Premium increase by $1 to $5.99/month, while Premium Plus rises by $2 to $11.99/month. The move comes as NBCU aims to invest in user experience and content, remaining competitive in the streaming market. Peacock boasts 22 million subscribers but faced losses of $704 million in Q1, with expected peak losses totaling around $3 billion in 2023. This follows a trend of streaming services raising prices, including Paramount,
Warner Bros. Discovery's HBO Max, Disney+, Apple TV+, and more. However, as recent data indicates, consumers are reaching their limits with subscription spending, with 35% of SVOD customers looking to cut back. 💰📈📺 #StreamingWars #PeacockPremium #PriceHike
Bard, the AI chatbot, is getting an impressive makeover, and who knows, it might even get a beach body soon! With Google Lens integration, users can now upload images to provide more context to Bard's responses.
The bot's extensions, including Google Flights, Maps, Hotels, and others like Instacart, Zillow, and YouTube, promise to deliver enhanced answers tailored to your needs. But watch out, Bard, because Meta's Llama 2 is here, and it's open-source and free for research and commercial use, opening up possibilities for more AI tools and apps. However, ethical concerns are arising, with thousands of authors expressing concerns about AI tools like GPT using their writing without permission or
compensation. Let's hope the AI world finds a balance between progress and ethical responsibility. 🤖💪🏖️📚
Pop-Tarts is launching a new "Agents of Crazy Good" campaign that brings back characters from its memorable "Crazy Good" ads of the 2000s. This time, the toaster pastries are no longer running from hungry people but actively enticing consumers to crave them. The campaign aims to associate Pop-Tarts
with snacking occasions beyond just breakfast, as they've seen increased adult snacking on their products since 2019. The new creative direction features sleeker 3D animations of characters like Frosted Strawberry, Brown Sugar Cinnamon, Hot Fudge Sundae, and mini-sized Bites. Consumers will get a taste of the campaign at the Adult Swim Fest in San Diego, where Pop-Tarts is putting on a fine dining experience. New video ads will air on TV in September. The brand is also sponsoring its first NCAA
college football bowl, the Pop-Tarts Bowl, organized by Florida Citrus Sports, with exclusive naming rights and on-site activations. 🍞🍓📺🏈 #PopTarts #CrazyGoodCampaign #Nostalgia
A recent study conducted by Reviews.org found that Americans believe they are checking their phones 58% less than they did a year ago. While it's not clear if this perception matches their actual behavior, the self-reported
responses suggest a decrease in perceived phone addiction. Other findings also support this trend, with a small decrease in nomophobia and feeling panicked when the phone's battery drops below 20%. Additionally, respondents reported using or looking at their phones 14% less than they did a year ago. However, there was a nearly 11% increase in the number of Americans who say they check their phones within 10 minutes of waking up. Overall, the statistics are encouraging from a societal
perspective, but individual habits may vary.
🎬🎭 The entertainment industry is facing a major disruption as both entertainment writers and actors are on strike, halting new, original programming in the fall. This absence of content opens up opportunities for unconventional programming, such as game shows and potentially featuring
YouTube creators on traditional television. The strike's impact on ad revenue is a concern, with advertisers potentially pulling commitments if there's no quality programming to attract audiences. Additionally, the movie theater industry, which is already struggling after the pandemic, may suffer further as fewer new releases hit the screens. The central issue in the strike is managing revenue associated with streaming, which remains unresolved. The next 30 days in the media world will be
interesting! 📺🎉 |
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SCHILLER’S SHOWTIME: A MEDIA MAVERICK’S INSIGHTS UNVEILED In this exclusive two-part series, we dive deep into the world of media and advertising with industry luminary Scott Schiller. With an illustrious career at the forefront of media giants like NBCUniversal and Glam Media, Schiller's strategic insights and innovative thinking have shaped the landscape of programmatic advertising. As an Adjunct Associate Professor at NYU Stern School of Business and an Executive-in-Residence at Progress Partners, he continues
to mentor the next generation of talent and advise companies on navigating the ever-evolving digital terrain. Join us as we uncover Schiller's vision for the future of media, the rise of Connected TV (CTV), and the transformative potential of Shoppable TV. Get
inspired by the wit and wisdom of this media maverick, and discover how his expertise continues to drive innovation in the dynamic world of advertising and media consumption. Start with Part One only on
ADOTAT.com
THE RIGHT WAY TO MEASURE MEDIA “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
The quote, from retail magnate and marketing pioneer John Wanamaker, is over 100 years old. Despite digital media’s promise of accountability, many retailers still struggle with this attribution conundrum. We’ve written this paper because we’ve witnessed first-hand the misleading results of ham-fisted and sometimes lazy models. At Undertone, we offer unique High Impact digital circulars,
recipe ads, and more, all personalized through a slew of AI- driven selected variables that drive sales lifts leading to 15x to 19x ROAS. These state-of-the-art products can stymie old and tired media models. This is because, in some retailer attribution models, high-impact display is treated with the same modeling considerations as boring, small, and entirely missable standard display ads. READ MORE OF THIS WONDERFUL ARTICLE
UNRAVELING THE EFFECTS OF MEDIAMATH’S BANKRUPTCY ON THE ADVERTISING ECOSYSTEM The recent Chapter 11 bankruptcy filing of MediaMath, once celebrated as a leading player in programmatic advertising, has sent shockwaves throughout the advertising ecosystem. With substantial debts owed to a vast array of ad tech businesses and creditors, the collapse of MediaMath is expected to have profound implications for various stakeholders within the industry. This comprehensive article delves into the financial
turmoil faced by MediaMath, the extent of its creditor obligations, and the far-reaching effects of its bankruptcy on the advertising ecosystem. READ THIS IN-DEPTH STORY
INSIDE THE GOOGLE VIDEO AD SCAM It’s bad. It’s actually worse than everyone was saying. Google may owe advertisers
billions of dollars and face huge lawsuits after scamming advertisers. For years, many people, including myself, have questioned the ecosystem of online advertising, particularly Google’s enormous advertising growth that seems to be backed by junk and scam sites. Now, new research reveals that Google has violated its promised standards when placing video ads on other websites, raising serious concerns about the transparency and integrity of the tech giant’s online ad business. READ THE FULL EXCITING STORY
THE FUTURE OF PROGRAMMATIC: MATT BARASH DEFENDS THE SSP. In an exclusive interview with VideoWeek, Matt Barash, Vice President at IndexExchange, provides valuable insights into the ever-evolving programmatic advertising landscape. With over 20 years of experience, IndexExchange has transformed from an ad network into a formidable exchange model, helping publishers monetize their assets. Barash highlights the seismic shifts witnessed in the industry, emphasizing the rise
of quality and video as paramount factors driving change. READ THE INTERVIEW
CRITEO’S COMPLIANCE WOES: REGULATORS SHOW THEY MEAN BUSINESS In a stunning turn of events, adtech firm Criteo has found itself in hot water with regulators, facing a hefty penalty of 40 million euros (U.S. $44 million) for multiple alleged violations of the General Data Protection Regulation (GDPR). The French data protection authority, CNIL, recently announced the fine, which sent shockwaves through the industry and left Criteo employees feeling like their yacht had suddenly transformed into a funeral barge, with no
explanation for this colossal punishment. READ MORE NOW |
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