Is Netflix About To Let The Advertising Fox Into The Hen House?

29 Apr, 2022

In his latest column for MAD//Insight, Ben Phillips, founder blp101 consulting + host of DigiAds@MAD//Fest, discusses Netflix's surprise move, and also asks 'what has Facebook done with your data?'

Where to start? I am thoroughly caught up in the cadence of 2022, aren’t you? 10 weeks to go until DigiAds@MAD//Fest2022 and it’s no coincidence that the headlines are playing so neatly into our themes of Privacy, Sustainability, CTV+ Digital Video. 

With so many announcements this week it has been difficult to keep up! In the last 2 weeks we have had; major investments, pivots, disappointing earnings calls and yes, a leaked document.  Here are my musings on recent industry events.

Last week Netflix announced plans for an Ad funded model, “in the next year or two”. Once opposed to such a model, Netflix, like other subscription services during these challenging times, has fallen fowl to “subscription fatigue”. Losing 200,000 subscribers plus a 20% loss in Q1 would make anyone reevaluate their position on letting the advertising foxes into their hen house!

Retrofitting ad funded models into previously unadulterated channels presents both challenges and opportunity. CTV is breaking new ground by inspiring innovation creative formats and use of data optimisation. 

Netflix has a history of repairing leaking revenue holes, notably back in Feb 2016, by blocking access to sites via VPN’s and now cracking down on shared accounts. Not only does this increase individual membership, but it makes audience profiling that much easier.

Expanding your offering to new customers with multiple points of entry is matched by price increases to membership for the more Premium product e.g. UHD broadcasting. (Lets face it, you’ll need to keep that to feed that new 43” smart TV you bought to get you through lockdown!)

Back in Feb, I wrote about CTV’s opportunity to build towards regulatory & tech changes, measurement and transparency, a 'Brave New World'.  Clearly an opinion shared by Goldman Sachs based on its minority investment of $325m in ispot.tv . It is encouraging to see investment in AdTech supporting insight, analytics. 

Meta’s Facebook found itself, exposed, after a leaked document written by its Ad Engineers, explained in no uncertain terms that, “We do not have an adequate level of control and explainability over how our systems use data…”  

A shocking admission at a time when DPA’s are doubling down on enforcing privacy policy. The rest of the sentence doesn’t make the admission any better, “….therefore, we can’t confidently make controlled policy changes or external commitments such as, ‘we will not use X data for Y purpose'. And yet, this is exactly what regulators expect us to do, increasing our risk of mistakes and misrepresentation." 

Now some have said that this isn’t an exclusive challenge to Facebook but could this be applicable to any other data controller/processor?

The jury is still out on what will happen next but maybe, just maybe, in the not-too-distant future, you will be on the sofa, popcorn in hand, binge watching the latest ad funded Netflix Limited Series documenting the journey in UHD?