Are advertising and announcements inevitable in the future of Netflix?
If a user of VoD platforms is asked why he likes that service and what has made him a follower of it, it is likely that he will end up talking about one question above all the others. The platforms do not have ads and the experience of viewing the content is not interrupted by the messages of the brands. That does not mean that the brands are not present (you just have to look at some of the Netflix releases to end up stumbling upon the notice that this content contains “advertising placement”, for example) and that they are not trying to sneak into the content that consumers consume, but they cannot do it with the format that is possibly their favorite on television and to which they have become accustomed.
For brands and companies this has become a problem. When it comes to how VoD is growing and how its momentum is impacting the advertising market and brand strategy, the topic often comes up. For companies, the growth of these platforms is reducing their potential advertising reach.
But is this reality sustainable? Can VoD platforms continue to grow and keep pace with the production of new content without having the capital injection of advertisers behind it? At the end of the day, traditional televisions launched new content on a recurring basis, but they had millions of dollars in ad revenue (and they didn’t seem to be releasing things every week as it happens with Netflix and the like).
Analysts believe that advertising will have to reach these platforms at some point, because their growth and even their present would be unsustainable without them. In fact, Netflix, who usually stars in these analyzes and debates, experts already predict a future with ads.
Netflix ad-free? “It is not what your recruiters are saying”
That’s what executives from Google and UM Worldwide pointed to in a panel at a conference on digital content and its new frontiers. The executives pointed out that they considered that in the end Netflix will have to include advertising. And not only that: a top Google management has hinted that they were working on it. When asked if Netflix would remain ad-free, Tara Walpert Levy, vice president of agency and media solutions for Google and YouTube, noted: “This is not what your recruiters are saying. They are going to need growth.”
Her words, therefore, hint at more tangible and more serious data, which suggests that the Netflix ads are not simply chimeras.
“I can’t imagine a world where Netflix is ad-free forever,” said Joshua Lowlock, chief digital and innovation officer at UM Worldwide. Lowlock believes that ads will eventually come back, that things will change (recognizing that the current situation comes from the fact that the industry thought it could serve ads anywhere).
Executives also discussed what those ad formats will look like. The table pointed out, as collected in AdAge, the medium that has captured the statements of these managers, that they may not use traditional advertising formats and rather new advertising models and also that they possibly offer versions with and without advertising, in order to connect with consumers in one way or another.
That is the model already used in the US by Hulu or CBS Access, two of the competitors in the VoD market.
A betrayal in the relationship with consumers?
But the Netflix movement, should the visions of these experts become reality (Netflix has not commented on the matter to the US media), could become a problem in its relationship with consumers.
At the end of the day, Netflix succeeds because its content has a pull but also because its users are willing to pay for an ad-free experience. Compared to traditional content (and even in the face of the ‘pirated’ experience of accessing it), the quality of the Netflix experience is fluid, good and free of the annoyance that ads are for viewers.