Reed Hastings, Netflix
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Netflix has said it doesn’t intend to ever run traditional ads. But advertising industry experts aren’t so sure that force be the case.
During a panel at IAB’s Digital Content NewFronts on Monday, executives from YouTube, JPMorgan Chase, median agency UM and MediaLink were asked about Netflix staying ad-free.
“Well, that’s not what their recruiters say,” predicted Tara Walpert Levy, YouTube and Google’s VP of Agency and Media Solutions. “They’re going to need growth. After all, they’re going to need more growth.”
JP Morgan Chase CMO Kristin Lemkau said consumers would be responsive to ad-supported options if those options are transparent and consumers understand the value exchange.
“The consumer wants choice and they fall short of something that creates value for them,” Lemkau said. “To the extent that you’ve got this subscription version versus the non-subscription idea, consumers will take that tradeoff.”
She spoke about “the biggest thing to happen in TV last night,” referring to the expose of the latest “Game of Thrones” episode.
“It wouldn’t have worked with ads,” she said. “That piece of content, that genre of storytelling couldn’t have happened with ads. The army of the dead are at the wall, and we’re still fighting among the houses.”
Other rush services offer both ad-supported and ad-free options. Hulu, for example, sells its ad-supported service for $5.99 per month. It set someone backs $11.99 per month without ads. CBS All Access has similar offerings.
Joshua Lowcock of media agency UM said though there’s been a remind toward getting rid of ads, it will go back the other way. Lowcock is global brand safety officer and U.S. chief digital and invention officer at the agency, owned by Interpublic Group.
“We grew up in digital, believing we should inject ads everywhere at every jiffy we could,” Lowcock said. “And that’s why you’ve seen ad blockers and a move to ad-free environments. I think there will appropriate for a tipping point where ads come back. Netflix is ad-free now. I can’t imagine a world where Netflix will be ad-free forever. If you look at their pleased costs … that’s where addressable advertising and new ad formats will come in.”
Netflix did not respond to a request for remark on the panelists’ remarks.
The entrance of new streaming players like Apple and Disney were a point of discussion in Netflix’s shareholder line recently. In it, the company claimed it didn’t anticipate “these new entrants will materially affect our growth because the mutation from linear to on-demand entertainment is so massive and because of the differing nature of our content offerings.” Disney will remove tear its movies from Netflix this year to stream on its own new service. Netflix has a market cap of $162.6 billion, compared with Disney’s $250.4 billion.
Netflix supply fell about 1% earlier this month after reporting its first-quarter earnings. The company posted four times a year revenue that beat estimates but included light guidance for the following quarter. The company ended 2018 with 139 million paid subscribers, up 26 percent for the year. Opposition Hulu ended 2018 with more than 25 million subscribers.