Inside Netflix’s advertising leadership shakeup

Netflix shocked advertisers yesterday when it announced the departure of advertising president Jeremi Gorman, who had been leading the streamer’s efforts to bring brands onto the platform for just over a year. Word of Gorman’s departure, and the appointment of Netflix veteran Amy Reinhard to the role, also came as a surprise to the Netflix ad sales team, which was notified of the move in an impromptu staff meeting yesterday, according to a person with knowledge of the meeting who spoke on condition of anonymity. Gorman was critical in building the Netflix ad team, poaching members from Snap, Hulu and Amazon, companies where Gorman and Peter Naylor, who is staying on as VP of worldwide sales, both worked in top ad roles. Naylor called advertisers yesterday to inform them of the leadership changes as the news was breaking, according to multiple agency sources. The move comes following a rocky start to Netflix's ad tier, which debuted in November 2022, just two months after Gorman was brought in to help launch it. A Netflix spokesperson declined to comment for this story. Gorman did not return requests to comment. Check out the latest Ad Age events and award programs Prior to Gorman and Naylor’s hiring, Netflix’s ad tech partner Microsoft initially pitched the ad tier to advertisers. At the time, the streamer’s bare-bones ad capabilities, including a lack of measurement, limited targeting and basic ad formats at industry-high prices, were a hard sell to buyers. But Naylor and Gorman’s industry goodwill was a point of hope. The duo had made strides in growing the ad tier to incorporate more audience targeting options, and on Oct. 2, launched Nielsen measurement on the platform. Netflix’s corporate leaders had over-inflated expectations that brands would throw money at the service, according to an advertising consultant who is familiar with Netflix’s ad business and spoke on condition of anonymity. Another agency executive said that Netflix leadership was concerned about the slow start to its ad business, and fretted that Gorman had not staffed up swiftly enough to capture brands. Even Netflix’s upfront in May, which many viewed as a coming out party for the streaming giant to the ad community, was hampered when it decided to move its first presentation virtual due to anticipated picketing from Hollywood writers who were on strike at the time. Still, rivals such as NBCUniversal went on with in-person upfronts, and Netflix seemed to be on its back foot. “Even on the simple stuff, like upfronts, there were complaints about the misalignment between Netflix’s old guard and the new ads team about what it takes to win in advertising,” the advertising consultant said. “I think Netflix realized holy shit this is going to be complicated.” In turn, Gorman was frustrated at Netflix and its ad strategy, according to a top ad industry consultant, who is close to Netflix’s sales leadership team. Read more: Netflix’s upfront retreat doesn’t deter TV networks Netflix is also facing pressure from the ad community to increase the amount of users who are subscribed to its ad tier. One media buyer said that while Gorman and Naylor did a good job developing Netflix’s ad capabilities, now the streamer needs to jumpstart user growth. This summer, Ad Age reported Netflix was nearing 2 million ad-tier subscribers in the U.S., while the streamer has said it reached 10 million global monthly active users on its ad tier, both numbers a fraction of the 238.4 million global paid subscriptions reported in Netflix’s second-quarter earnings. Netflix continues to drive users toward its ad tier as it cracks down on password sharing with paid profile add-ons per user watching outside of the account owner’s location (priced at $7.99 per additional user versus the ad-supported subscription, which is $6.99 monthly). Netflix also intends to raise the price for its ad-free subscriptions, the Wall Street Journal reported this week, which could drive users to its ad tier as well. Netflix is following the path of nearly every other major streaming service in raising prices,” said Insider Intelligence senior analyst Ross Benes via email. “Raising prices on ad-free plans nudges consumers to choose cheaper advertising tiers. This is advantageous for services like Netflix because advertising plans bring in more revenues per user than ad-free plans.” License to advertise Replacing Gorman is Reinhard, who has served in content acquisition and studio operation roles since 2016. Elevating Reinhard to the president of advertising gives that role to someone who has experience building Netflix’s library of content and striking deals to stream shows outside of originals. That is a key position as streamers such as Warner Bros. Discovery’s Max have begun licensing content to other streamers in an attempt to recapture past methods of boosting streaming revenues and a place where Netflix could bring more ad inventory online. For instance, the show “Suits,” which starred Meghan Markle and ended in 2019, has been Netflix’s No. 1 show (and No. 1 show in all of streaming) since it came to the platform in June. Reinhard could help Netflix get brands to integrate into shows and content, beyond the typical 30-second commercial, according to the ad consultant. Premium streamers, including Netflix and Disney+, have been making shows that have brand tie-ins. “It seems to me that they’re looking for new ways to revive advertiser interest and opportunities, outside just 15- or 30-second ads,” the consultant said. “Brands like getting more for their dollar than just an ad. They like that their brand lives in that show forever.” Three agency buyers Ad Age spoke with were not familiar with Reinhard. Media buyers have already felt relationships with Netflix have been lacking, with one noting that Netflix seems to prefer the role of tech company rather than relationship building, particularly as it still goes to market alongside tech partner Microsoft. A second media buyer said their clients were unclear about who their Netflix sales lead was when looking to discuss inventory and confused members of Microsoft’s sales team with Netflix’s. Multiple sources expressed confusion over Reinhard’s appointment to the top role rather than promoting Naylor. Regardless, buyers anticipate Naylor will handle the bulk of Netflix’s direct work with the market. Netflix also needs to develop more ad tech for more automation to manage campaigns, targeting and measurement, according to multiple advertisers and ad tech execs. “They need to acquire actual advertising delivery and measurement technology,” said one ad tech executive, who is familiar with Netflix’s talks with the industry. “The performance marketing teams, those guys want self-service tools,” said the advertising consultant, who was familiar with Netflix’s industry relationships, “and they want to be able to target. They want to see value. They want measurement. That’s not what Netflix is doing.” Netflix has been making some strides here. The company said it launched Nielsen measurement officially for campaigns running on the platform on Oct. 2. Netflix also brought in third-party verification firms DoubleVerify and Integral Ad Science, which was seen as a win for advertisers that wanted independent validation tools. Check out more media news here During Netflix’s virtual upfront and at previous industry events, such as the 2022 Cannes Lions, the company has teased advertisers with dreams of products “better than TV.” Netflix co-CEO Ted Sarandos has mentioned working with brands on spots created in the style of the show being advertised against, or a “30-minute commercial that plays out over several days.” And advertisers are looking for a platform to shake up the streaming space. Some are pegging Amazon, which recently announced ads are coming to its Prime Video originals, as a streamer that will bring desired innovative formats and interactivity to market. The advertising reorg could be a sign that Netflix needs a new tact internally to get leadership fully on board with what it will take to tackle this market, the advertising consultant said. This week, Netflix also elevated Eunice Kim, head of the consumer product innovation team, to chief product officer, and made Elizabeth Stone the chief technology officer, after she headed data and insights. “Advertising is an expensive business to run, it’s a hard business to run,” the consultant said, “and if you’ve never run an ads business before, like Netflix, you go kicking and screaming into these things.”

Inside Netflix’s advertising leadership shakeup

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