Netflix head of ad sales Peter Naylor on ad innovation, measurement and the upfronts

Netflix completed the 12-market rollout of its ad-supported subscription tier on Thursday. What’s next? For now, Peter Naylor, the streamer’s recently appointed VP of advertising sales, asked marketers to “let us just get going, build the audience”—and then, he promised, advertising innovations would follow. Naylor gave advertisers an early glimpse of what could be next for Netflix—including new measurement partners, shoppable ads, creator-made commercials and its upfront plans—at Ad Age’s Next: Streaming conference on Nov. 10. The sales VP joined the chorus of other Netflix executives over the past months warning marketers that its initial ad product is a far cry from what they intend to offer soon. The current ad tier is a “minimally viable product,” as Naylor described it, but he said it won’t be long before it justifies the industry-high CPMs, or cost to reach a thousand viewers, that Netflix has demanded (media buyers have placed the number from the high-$50s to mid-$60s, as previously reported by Ad Age). “[Marketers] shouldn’t buy based on CPM,” Naylor said. “You have to evaluate the media properly as opposed to just diving for CPMs. And with a looming recession, I think there might be pressure from clients and their agencies to merely focus on the bottom line instead of focusing on the quality of the content, the quality of the audience and what they’re getting.” “Quality” has been a common refrain from Netflix in response to advertiser complaints about minimal targeting, measurement and ad products, as well as little precedent from the company for transparency beyond its own audience metrics, like the weekly Netflix-generated “Top 10” list. While Naylor said the ad-supported tier’s “audience is developing as we speak,” multiple media buyers have told Ad Age that Netflix has yet to share early results despite requests for data. Netflix measurement But Netflix promises its measurement solutions will soon solidify. The streamer previously announced partnerships with DoubleVerify and Integral Ad Science as well as Nielsen’s Digital Ad Ratings in the U.S., each rolling out in 2023. Also read: Nielsen accreditation status to remain suspended While Naylor joked that the ad sales team is sorting through “about 150 other measurement companies in my LinkedIn inbox,” he also said that in terms of having a transactable currency, “Nielsen is—it’s kind of a requirement.” Netflix is also in talks with Nielsen-alternative currencies—with Naylor specifically mentioning “upstarts who have gained a lot of traction, whether it’s the VideoAmps, the iSpots or even like a Comscore.” A key point of differentiation for Netflix, in an effort to control common consumer nags like ad frequency, will be “controlling sources of demand,” he indicated. As the digital video buying process has become fragmented across direct sales, programmatic vendors and various demand-side platforms, duplicated reach has become a common issue as brands buy across multiple avenues that might place the same ads in the same inventory. Naylor mentioned interest in “closed-loop” measurement in the vein of retail media networks, in which a retailer utilizes its first-party customer data to buy and sell advertising, a strategy that might move the streamer even further towards insular data and sales. Media measurement blog Tracking TV, social and digital updates Click here Netflix all-stars The mastermind of Netflix’s coming measurement offerings will be Julie DeTraglia, who Naylor and Jeremi Gorman, president of worldwide advertising, hired as VP of ads measurement strategy. DeTraglia, who starts her role today, most recently served as Amazon’s global head of sports strategy and research, as well as serving in past research roles at Disney, Hulu and NBCUniversal. Other new additions to what Naylor called an “all-star team” are Adam Gerber, previously GroupM’s executive director of U.S. investment strategy and soon to be Netflix’s head of client development; Julie Green, previously TikTok’s director of global business solutions, who will serve as Netflix’s director of vertical sales; Nicole Sabatini, who will move from YouTube Ads’ director of product marketing to Netflix’s senior director of ad partner solutions; and Chris Smutny, previously Snap’s director of revenue operations and strategy, who will serve as Netflix’s senior director for sales operations. The hirings were initially reported by The Hollywood Reporter. Netflix ads While Netflix currently only offers 15- and 30-second mid- and pre-roll ads for films and TV shows, the company has stated ambitions for innovative offerings. At this summer’s Cannes Lions International Festival of Creativity, for instance, Co-CEO Ted Sarandos got audiences buzzing with promises of ads that would be “better than TV” itself. At Ad Age Next: Streaming, Naylor described shoppable advertising that will move beyond scannable QR codes while utilizing trends in multi-screen viewing. Naylor said pairing secondary screens, like a phone, with on-screen interactivity is an area of interest for him. Roku, for example, has been active in that converged shopping space with its announcement of a shoppable product that pairs its Roku Pay digital wallet with onscreen products. Naylor pointed to past interactive programming that Netflix has created, such as the choose-your-own-adventure special “Bandersnatch.” Another way Netflix might potentially set its advertising apart is through its roster of creators. While some have speculated that sought-after showrunners such as “Dahmer” creator Ryan Murphy, “Bridgerton” creator Shonda Rhimes, and “The Haunting of Hill House” creator Mike Flanagan might have qualms about the insertion of advertising into their shows (especially given that they created those shows when Netflix was still staunchly anti-ad), Naylor said Netflix has been collaborating with creators to brainstorm about how they might partner with marketers in the future. “This is their content. These are their babies,” said Naylor. “To my great delight, a lot of them are like, ‘I’d be really interested in working with advertisers to create commercials that might go in our shows.’ ... I think they understand the economics of the business, and if you have to serve ads, they’d like a say in it and they’d like to aid and abet in that.” Naylor also teased how Netflix will approach next year’s upfront season, when each network schmoozes advertisers with flashy, star-studded shows in a plea for investments. “We're going to play a big role,” he said, pointing to January’s Consumer Electronics Show as the kickoff for beginning client pitches. “And we’re going to absolutely go for share.”

Netflix head of ad sales Peter Naylor on ad innovation, measurement and the upfronts

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