Netflix’s ad tech business is one of the hottest deals on offer in Cannes, and titans like Google are in talks to win the streaming giant’s connected TV business, according to people familiar with negotiations.

On Monday, as the Cannes Lions ad festival kicked off, Google was said to be one of the main contenders to partner with Netflix on advertising. “If it’s anyone, it’s going to be Google,” said one advertising executive, who is familiar with the inner workings of both companies.

A Google spokesperson declined to comment.

The latest: Netflix co-CEO addresses Cannes

Google would be a logical partner for Netflix, since it already has friendly relationships with companies like Disney, which uses Google Ad Manager to manage internet ad delivery, even as Google can be a rival to those companies.

Netflix co-CEO Ted Sarandos is in Cannes this year, marking the company’s first semi-official presence at the advertising portion of the festival. Netflix has been a player at Cannes Film Festival for years. People familiar with Netflix’s strategy said the company would be talking with the ad world as it congregates for the first time since 2019. 

Netflix could partner with more than one ad tech company to have a more open platform, and on that front, Magnite has emerged as a key potential supply-side partner, too, according to people familiar with Netflix’s considerations. Magnite has a major presence at Cannes, with a yacht parked near the Palais.

A person who said he'd spoken with Magnite CEO Michael Barrett said he'd been informed Netflix intended to announce a partnership with the company at Cannes. Magnite declined to comment. 

A Magnite spokeswoman declined to comment, other than to convey from Barrett that he didn't talk to anyone about the Netflix announcement.

When asked about a possible deal with Magnite, a Netflix spokesperson said, "We are still in the early days of deciding how to launch a lower-priced, ad-supported option, and no decisions have been made. So this is all just speculation at this point." Netflix, which previously was adamant that it would never run ads, finally opened the doorway to selling commercial inventory in April.

Another ad tech executive, who spoke on the condition of anonymity and had no information about those plans, said Netflix's primary need is an ad server, which most likely could be provided through Comcast's Freewheel or Google, but that adding a supply-side platform in the early going wasn't necessary and could be counter-productive by increasing latency and undermining the user experience.

Magnite does already work with Google's DV360 for media buying, but not on the sell side, in parts of the world including the U.S., but through agencies in other markets, this executive said.

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