CANNES — Will Netflix introduce advertising? That is a question on many minds in Silicon Valley, Wall Street and Madison Avenue alike.
Often, the question is framed as an “either-or” in which Netflix would have to choose between continuing its current premium SVOD model or ripping it up in favour of ad funding.
Previously, Ampere Analysis’ Richard Broughton has told Beet.TV Netflix could make up to $8bn a year from advertising if it switched over entirely, but would have to accept churn would knock off some of the gain, as angry consumers quit.
But one ad agency executive doesn’t think the choice has to be so dichotomous. Speaking in this panel debate recorded by Beet.TV, GroupM North America CEO Brian Lesser said an ad model for Netflix could be a lot more intrinsic and less disruptive.
“The question is not necessarily, ‘Is Netflix thinking about how to infuse advertising in to its model?’,” Lesser said.
“Netflix is, I would bet, having conversations about how big-brand advertisers can get involved in content creation so that they can have a more effective engagement with their consumers.
“I think, over time, all over-the-top content, with Netflix being the gold standard, will have to be financed in some way by what we, traditionally, know now as the advertising business.”
Also in the panel, ad agency tech and data executives discussed whether the modern-day precision capability to target only customers known to be in-market for a particular brand or product will mean an exclusive focus on performance advertising, at the expense of traditional top-of-funnel or brand-based advertising of the like commonly seen on TV.
- Hearts & Science CEO Scott Hagedorn: “If (a consumer) can’t afford a Mercedes Benz, why not save the money and not advertise to them?”
- IPG Mediabrands chief data and marketing technology officer Arun Kumar: “We need to focus more on things like the customer joinery – in what stages of life are those customers… ? Figuring out… so that you can get the best outcome.”
- Dentsu Aegis Network product and innovation president Doug Ray: “Consumers may not be int he market today, but maybe in the market down the road. There’s a role for building the purpose of the brand, amplifying that through lots of exciting creative type of engagement.”
This video is from The Mastercard Automated Advertising Panel at Cannes Lions 2017. For more from the series, please visit this page.