Whether you love a personalized ad experience, or find it unsettling that a company knows your shopping habits better than you do, targeted ads are here to stay. They are a powerful tool for advertising companies, driving robust sales numbers and garnering lots of attention, even if that attention is sometimes negative.
Netflix certainly sees the potential of personalized ads. In the company’s third-quarter earnings call, executives discussed the impending rollout of the company's ad-supported streaming tier on Nov. 3. Part of that discussion was the possibility of employing a personalized ad experience for customers in the future.
“Over time, we’re going to access a bunch of the capabilities that you’ve seen us leverage over the last 10 years to think about innovation in the space. So personalization, I think, is a great example where we don’t need to think about the ads experience as being uniform across all of our members,” said Greg Peters, COO and Chief Product officer of Netflix. “And we think about we can leverage the personalization capability that we’ve built in terms of titles and how we present titles and also in terms of how we present ads. So I think that’s an exciting dimension that we’re going to work on as well.”
Peters also noted that the company is looking for ways to partner with its advertisers to innovate the way that ads are presented on the platform.
“We’re starting with meeting the market where it’s at today,” Peters said. That’s important to access sort of all the capabilities they’ve got, but we don’t need to stay there. And I think we’re looking forward to, over a couple of years, understanding what is the right native format [for ads] for premium connected TV and figuring out what that looks like.”
The ability to innovate with its ads is something Netflix may have wanted to include sooner rather than later, but the rush to market with the ad-supported tier did not give the company enough time. The new tier of Netflix will be available a mere six months after it was first announced. That means that at launch, Netflix and its partners will use very basic information, such as age, gender, and popularity of specific content in certain countries to serve ads to customers.
“We’re very much in a crawl-walk-run kind of model that we talked about before we’re sort of iteratively improving,” Peters said. And so we’re building in a lot of capabilities over the next couple of quarters that we think are important to advertisers to make that advertising offering increasingly attractive and sort of check a bunch of boxes that they have.”
Thankfully, Netflix has also been conscious about checking the boxes customers may have in regard to their ad-supported tier. The company has committed to an ad load of just four to five minutes per hour of content, and has promised to keep frequency caps on ads low, meaning that viewers won’t be bombarded with the same commercials over and over again. That will help Netflix stand out from linear TV, but also from other ad-supported video-on-demand (AVOD) services that show more ads per hour.
Netflix added 2.4 million subscribers in Q3 of 2022, boosting its total to over 223 million global customers. It’s unclear how many new subscribers the company will attract with its forthcoming ad-supported tier, but the company is already looking for as many ways to get maximum value from those customers and its new advertising partners.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.