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Future of TV Briefing: Netflix plots next phase in its programmatic ad push

November 5, 2023
in Technology
Future of TV Briefing: Netflix plots next phase in its programmatic ad push
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This Future of TV Briefing covers the latest in streaming and TV for Digiday+ members and is distributed over email every Wednesday at 10 a.m. ET. More from the series →

This week’s Future of TV Briefing looks at Netflix’s plans to provide more programmatic buying options for advertisers.

As Netflix marks the one-year anniversary of launching its advertising business this week, the streaming service is in the process of expanding the programmatic side of that business.

Netflix has started talking with ad buyers about enabling advertisers to buy its ad inventory through demand-side platforms other than Microsoft-owned Xandr’s DSP, according to three agency executives with knowledge of the matter. 

The executives described the talks as early — “pretty surface-level” was how one agency executive described them — with no timeline available for when Netflix would enable this option. But they said the option would be limited to programmatic private marketplace deals, as opposed to Netflix making its inventory available through the programmatic open marketplace.

A Netflix spokesperson declined to comment on the record. Digiday previously reported that Netflix’s deal with Microsoft, announced in July 2022, was set for two years and that Netflix has explored alternative ad tech options. In July 2023, The Wall Street Journal reported that Netflix was reworking its deal with Microsoft.

As stated, since Netflix introduced its ad-supported tier, Microsoft’s DSP has been the only option for advertisers to purchase the streamer’s inventory programmatically. And Netflix has been pushing to get advertisers to adopt the DSP. It has offered a 5% discount on ad buys activated through Xandr’s DSP instead of through traditional insertion orders, per agency executives. And after announcing in April plans to open up a PMP for advertisers buying through Xandr’s DSP, Netflix has officially made that PMP available in addition to programmatic guaranteed deals (advertisers and agencies tend to prefer PMP deals over PG deals).

However, some ad buyers have been less than keen on having to buy Netflix’s inventory through Xandr’s DSP. The primary pushback is from advertisers and agencies that use non-Xandr DSPs for their non-Netflix ad buys and want to be able to manage these broader ad buys through a single DSP.

“If you use the Xandr DSP, you get the percent off, but you’re not getting the benefit of using a programmatic platform because you can’t connect the dots to the rest of your buy,” said a second agency executive.

To be fair, Netflix isn’t exactly an outlier when it comes to pushing a preferred DSP. Amazon, Roku and Samsung each have their respective DSPs that are exclusive options for certain streaming ad inventory. And YouTube’s ad inventory remains locked through Google’s Display & Video 360 DSP. So advertisers and agencies are accustomed to having to manage their programmatic ad buys across multiple DSPs. That doesn’t mean they like it, though.

“Because of that fragmentation, if we’re not able to activate it concisely in a programmatic way, it’s really hard to manage that duplication,” said the first agency executive.

Another of agency executives’ frustrations with Netflix thus far limiting its programmatic buying options to Xandr’s DSP is that the data shared by the DSP is limited. For example, advertisers and agencies buying Netflix’s inventory through Xandr’s DSP do not receive the IP addresses for households exposed to their ads, which inhibits advertisers from being able to manage the frequency with which individual households are exposed to the same ads on and off Netflix.

“It’s not a true programmatic buy because you’re not getting certain pieces of data that you could then leverage and use in a programmatic platform. So it’s almost like pseudo-programmatic because you’re not getting all the information you need to then be able to use it in a good, effective way programmatically,” said a third agency executive.

Opening up to non-Xandr DSPs wouldn’t necessarily mean Netflix opening up more data to advertisers, though. For example, Netflix has blocked advertisers and users from using their tracking pixels on its properties, which would not be a strictly DSP-related issue. And this pixel-blocking as well as the IP address-blocking both seem to be moves by Netflix both to protect its viewers’ privacy by preventing them from being tracked outside of Netflix as well as to protect its ad business from ad buyers identifying its ad-supported audience members elsewhere.

Nevertheless, opening up its inventory to non-Xandr DSPs could be enough of an olive branch to open up Netflix to more ad dollars.

“The sentiment that a lot of brands have had has been, like, ‘We’re not going to buy you because of the limitations that you have,’” said a fourth agency executive.

“They’ve got to get their programmatic practice properly launched beyond just Xandr, beyond just one partner,” said the second agency executive. “It’s not a knock on Xandr-slash-Microsoft. It’s just the marketplace is never on a single tech stack. So you’ve got to be interoperable to how advertisers are looking to spend.”

This article has been updated to reflect that a Netflix spokesperson declined to comment on the record.

What we’ve heard

“I’m excited about YouTube Shorts more than TikTok. [Shorts] feels more like a space [where] news publishers can be successful.”

— News publishing executive

To commemorate the one-year anniversary of Netflix entering the advertising business, I put together a video surveying the state of that business based on interviews with agency executives.

Numbers to know

$9.99: New monthly subscription price for Apple’s Apple TV+, a $3 increase.

28 million: Number of paid subscribers that NBCUniversal’s Peacock has.

>40 million: Number of monthly active users for TelevisaUnivision’s free, ad-supported streamer VIX.

-6%: Estimated percentage decline year over year in TV ad spending in the third quarter of 2023.

$7.95 billion: How much ad revenue YouTube generated in Q3 2023.

-320,000: Number of pay-TV subscribers that Charter lost during Q3 2023.

-79,000: Number of pay-TV subscribers that Verizon lost during Q3 2023.

What we’ve covered

Ad tech firms and political agencies prepare for another year of spending heavily on CTV:

Political advertisers are expected to spend $1.3 billion on CTV advertising, per AdImpact.

That amount would exceed the money political advertisers may spend on digital advertising.

Read more about CTV ad spending here.

How TikTok is using data to convince gaming brands to spend on the platform:

TikTok published a report to promote the platform as an attractive option for gaming advertisers.

The report focused primarily on console- and PC-based gaming.

Read more about TikTok here.

Pixability looks to boost media investments for diverse YouTube creators:

The video ad vendor has created a program to connect advertisers with self-identified diverse creators.

Pixability claimed hundreds of creators have joined the program.

Read more about YouTube creators here.

What we’re reading

Nielsen backtracks on measurement switch:

The dominant measurement provider has decided to pull a Google and push back its self-imposed deadline to deprecate its traditional measurement system by next September, according to AdExchanger.

Cross-industry measurement collaboration effort stalls:

In another setback for the TV ad industry’s measurement overhaul, the Video Advertising Bureau has put on ice its work with the Association of National Advertisers to create a measurement panel because the trade org representing traditional TV networks doesn’t like Google’s and Meta’s involvement, according to Ad Age.

AMC Networks’ new programmatic sales pitch:

The cable TV network owner has officially started selling its live linear TV ad inventory programmatically through a collaboration with Comcast-owned FreeWheel, The Trade Desk and Canoe Ventures, Variety reported.

TikTok’s “qualified” view conundrum:

Creator Hank Green has pointed out in a tweet an X post that TikTok’s rev-share program for 1-minute-plus videos only pays for what the platform deems “qualified” views but without disclosing what counts as a qualified view.

>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : DigiDay – https://digiday.com/future-of-tv/future-of-tv-briefing-netflix-plots-next-phase-in-its-programmatic-ad-push/?utm_campaign=digidaydis&utm_medium=rss&utm_source=general-rss

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