How Netflix’s Entry into Advertising Will Shape the Future of TV Marketing
Netflix’s imminent dive into the world of advertising will initiate the video advertising industry’s biggest event since the rise of TikTok. Curt Larson, chief product officer at omnichannel supply side platform Sharethrough, believes Netflix will push the whole TV ad industry forward.
Here’s my conversation with Larson on Netflix’s move and the future of TV advertising.
You see Netflix’s entry into advertising as having broad implications for the TV advertising industry. How so?
Netflix’s entry intro advertising will impact the TV advertising industry for a variety of reasons. So far, CTV has adopted the same design paradigm as linear TV when it comes to ads by continuing to show interruptive 15 and 30 second ad breaks that display full-screen, advertiser content. This ignores the innovation that a digitally connected smart device makes possible in terms of displaying creative, new ad formats.
Netflix has a massive opportunity to experiment with new ad formats at scale and from that scale potentially push new ad formats into the entire ecosystem. So, if advertisers start creating assets designed for new contexts, they will have those assets available to run on other services besides Netflix.
As interruptive ad breaks have become widely used, consumers are not paying attention or interacting with currents ads. Better ad experiences can drive platform adoption and in turn accelerate innovation on all platforms.
What are some of the innovative ways advertisers can make TV ads more effective?
Given the success Netflix has seen with its recommendation algorithms, we’ll likely see it extend that approach to its rollout of ads. Interruptive ads can be jarring and increase the likelihood that viewers will check their phones or grab a snack during commercial breaks.
By ensuring the ad is relevant to the content they are already watching and displaying ads on a small portion of the screen while a show or movie is playing, Netflix will be able to keep users engaged during a time when they’d typically become distracted. Additionally, there’s an opportunity to take advantage of secondary experiences, such as channel guides, pause screens, and screen savers, which are mostly untapped for ad inventory and are also non-interruptive.
How crucial is interactivity to the future of TV advertising?
For now, interactivity will remain a small part of the overall ad experience due to the inherent, passive experience of watching TV. That said, interactivity will be extremely significant to the future of TV advertising, especially as consumers become even more accustomed to the personalized nature of their social media feeds, where the content is always fresh, a thumb-scroll away, and underpinned by their social networks.
Innovations in the past couple of years have made great progress with enhancing interactions consumers have with ads. For example, QR codes allow consumers to engage when they’re interested in a brand or product, and they bridge the critical TV-to-phone divide. Other technologies need to focus more on the TV-to-phone divide for interactivity, and one possible step to breaking that divide would be to push an alert to a user’s phone if the user clicks OK for a particular ad with their TV remote.
Most streaming services, like Netflix, have a phone app to stream their programs already, so the app could be utilized to push alerts after ads come up.
Do you see developments like this transforming TV into more of a performance channel?
Innovations that bridge the TV-to-phone divide like QR codes and phone alerts can make inroads to TV becoming more of a performance channel in the future. However, it will take time to shift the consumer mindset away from the traditional lean-back, passive experience.
That said, demand is strong for branding, and TV ads are likely to stay more branding-focused, but the interactivity within those ads can make progress toward transforming TV into more of a performance channel.
