Urgency to strike deals
Procter & Gamble Co., one of the world's largest and most influential advertisers, mentioned Netflix in a Cannes presentation on Tuesday. One campaign P&G Chief Brand Officer Marc Pritchard showcased in his talk at the Palais was a collaboration between Old Spice, Wieden+Kennedy and Netflix to create an ad and product line linked to the launch of season two of the platform’s “The Witcher” series. The idea is that body odor is a plague, but people are eagerly awaiting the arrival of Old Spice, which the soothsayer says is coming in 700 years.
Pritchard didn’t share any details about Netflix’s ad-supported service but said, “We’re definitely interested. We’re all ears.”
The connected TV ad space proved too lucrative for Nextflix to ignore, especially as its share price sagged more than 70% this year, from about $600 in January to around $175 a share this week. Netflix’s streaming rivals such as Disney, Paramount, NBCUniversal and Warner Bros. Discover have developed ad-supported platforms. The connected TV ad market is expected to generate $19.1 billion in the U.S. this year, up from $9 billion in 2020, according to eMarketer.
Netflix has said that the fastest way to develop an ads business would be to partner with ad technology players. When the ad plan was announced, Netflix had shed about 200,000 of its subscribers and predicted it could lose 2 million more in the second quarter, which ends in June. Co-CEO Reed Hastings described how Netflix planned to approach selling ads by creating partnerships, the kind that Google could help with. “We can be a straight publisher and have other people do all of the fancy ad matching, and integrate all the data about people,” Hastings said during a call with Wall Street analysts in April.
Netflix has indicated it could start running ads as soon as the end of this year, which accounts for its urgency to strike deals with ad tech partners that could help ramp up the ads business. There are other contenders that could prove strategic for Netflix, including Roku, Amazon and The Trade Desk, among others; companies with demand-side video ad platforms that could auction ads into Netflix subscriber homes.
Comcast-owned Freewheel, which also owns NBCUniversal, is another ad platform for publishers and media buyers. But it’s unclear that Netflix would want to hitch its wagon to such a close rival. Talks between platforms and media companies are fraught with petty proprietary concerns as the companies compete over content, data and ads.
Streaming companies do have a history of making deals with ad agencies and technology providers. In March, Disney announced a deal with Horizon Media to measure ads, and also said it was “exploring a path to activation with The Trade Desk.”
Developing an ad sales team is another key piece of the equation that Netflix needs, and that is another topic that the company is looking to advance at Cannes, which is loaded with advertising leaders with key sales contacts.“Netflix is talking to a lot of people everywhere to try to get sellers,” said one ad industry executive, who spoke on the condition of anonymity, talking to Ad Age ahead of Cannes. “If you’re a seller right now, and you have a book of business, you’re a hot commodity.”
Contributing: Catie Keck