tvScientific CEO: Netflix Could Learn from Google+ and Facebook

Netflix’s Q3 earnings are in, along with a rise in subscribers since July, price hikes for all types of them, and a jump in share price.  Now, it remains to be seen whether the streaming service can scale its ad-supported ambitions.  Jason Fairchild, co-founder and CEO of tvScientific, thinks the company still has work to do in that area. “Netflix has a huge long-term opportunity in advertising,” Fairchild said. “But they need to work through the ‘cold start’ problem around the audience scale.”

tvScientific is an advertising platform that enables any business to use connected TV to reach customers and generate growth. It can also support businesses of all sizes in measuring and achieving ad-performance goals – whether that’s to drive a purchase or an install.

Like all streaming services, Netflix is able to target audiences using data about demographics (it knows your zip code and the median age of you and your neighbors) and past viewing habits that inform suggested personalized content.  But its ad-supported tier, launched in November 2022, has struggled to scale.

As Fairchild noted, “If Netflix has five million global ad-supported customers, it’s reasonable to assume that their U.S. ad-supported audience is somewhere close to 2.5M. That’s nowhere near the relevance threshold for major brand advertisers.”

It’s no wonder Netflix unveiled plans for “below-the-line” marketing activations. During Advertising Week on Oct. 17, Netflix VP of Global Advertising Sales Peter Naylor revealed that his company has signed Nespresso and T-Mobile as sponsors for its planned streaming of live sports.  “Netflix is going after the top 500 brands that drive 85% of traditional TV spend,” Fairchild said. “These brands primarily want reach and frequency against scaled audiences.”

Netflix, which had a major presence at Advertising Week, complete with a lounge providing interactive experiences for attendees, is dipping its toe into another kind of local marketing with plans to open two physical stories in 2025.

Fairchild thinks Netflix should take a page out of the Google+ and Facebook playbook and pursue the top 10% of performance-oriented advertisers. “These are huge advertisers that require tools to measure ROI on their ad spend,” he said. “But if Netflix can meet these customer requirements, the streaming market opportunity (as evidenced by Google and Facebook revenues) is far larger than the ~70B traditional U.S. brand TV advertiser market.”

Netflix declined to comment.

For its part, tvScientific has had success for its clients in driving local and regional purchases for streaming live events. It did so two years ago for the Tulalip Resort Casino in the State of Washington, getting tourists to the area to attend live events there. Tulalip worked with tvScientific, whose platform is self-serve and offers transparency and rich insights, to run a CTV campaign.

Tulalip wanted to reach households watching CTV with professionally produced TV-quality content. They wanted their advertisements to be full-screen and non-skippable, Fairchild said.  To measure performance, tvScientific placed the tvScientific pixel on-site to track outcome events, then matched viewers who were exposed to the CTV ad to those who later purchased tickets. Using tvScientific’s “always-on incrementality,” the activation saw a 1.63x return on ad spend and a $243 Value per Conversion.

tvScientific can build target audiences composed of viewers within a drivable radius of a venue, then create a seed audience using previous concert attendees segmented by past event type and expanded reach with lookalike targeting to find similar audiences aligned to each artist’s profile.

tvScientific was founded in 2020 by executives with deep roots in search, programmatic advertising, digital media, and ad verification. The company touts its attribution capabilities, which it says are critical features that enable performance marketers to put TV back into media spending mix.

TV, Fairchild and his colleagues believe, is the most impactful medium in the world. He says much of the $72 billion TV advertising market will likely flow through programmatic technology in the coming years. Additionally, as technologies emerge to enable the buying and measurement of TV advertising in a manner similar to search and social media, the nearly $200 billion spent on performance advertising in the U.S. is expected to shift toward CTV.

Unlike CPA buying, CPO is a broader metric that measures the cost of achieving a specific outcome in a campaign. The outcome can be any predefined result that the advertiser is aiming for, and it may include multiple actions or conversions.

Advertisers using the tvScientific platform can buy CTV ads on a cost-per-outcome (CPO) basis. By buying CPO, advertisers can move beyond simple reach and frequency or MMM models and for the first time ever buy media based on real outcomes and sales lift, Fairchild explained.