Home Ad Exchange News Netflix Has Ads Now; Why Big Tech Will Win Big Sports

Netflix Has Ads Now; Why Big Tech Will Win Big Sports

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The New Net

Netflix has ads. 

Hooray?

Netflix launched its ad-supported tier last week, and Netflix Basic with Ads, as it’s called, will be, well, basic. Targeting is done by category and genre, with Nielsen, IAS and DoubleVerify as measurement partners. The ad load will be between four and five minutes per hour of content, as promised.

But whether, where and how many ads appear isn’t consistent across streams, The Verge reports. Some movies have midroll ads, while others don’t, while certain shows have preroll, midroll or, in some cases, no roll … as in, no ads appear.

Makes sense, since certain programs can’t include ads due to licensing restrictions. You can see some of those shows and movies on the ad-supported content slate – but you can’t watch them. They’re marked with a red padlock that prompts users to upgrade their plan.

In other words, Netflix is still hoping to woo ad-supported viewers to an ad-free subscription plan, which it sees as higher value.

That said, if Netflix can maintain the $65 CPM it publicly set as a floor – and the bulk of revenue per user shifts to advertising – there will be strong pressure to move exclusive content, including some tentpole programs, to the ad tier to boost CPMs and supply.

Bright Young Things

Tech giants have huge advantages when pitching for sports distribution rights – the crème de la crème of content.

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They’re rolling in cash, but they can also offer the best placements. Amazon’s Thursday night NFL game owns the homepage of Amazon Prime, Twitch and the Amazon site and app.

When Apple recently signed Major League Soccer, it committed to streaming every game in every market. Comcast, which has the English Premier League rights in the US, previously streamed every game to TV subscribers – but when Peacock launched, NBCU made all but one EPL game exclusive to its streaming service.

NBCU’s priority is to generate Peacock sign-ups, even if that choice comes at the expense of the Premier League’s reach and popularity in America.

But Big Tech has another advantage. As Mike Shields writes in a Substack post, tech’s biggest edge may be age disparity. Younger audiences are disappearing. Ratings for even the most premium TV content, like the NBA Finals, were down from 21% in 2019 to 17% this year among 18-34-year-olds.

That primo young demo isn’t watching NFL broadcasts either. Only 14.2% of NFL broadcast audiences were between 18 and 34. Move over to Amazon, however, and the young crowd makes up 23.6% of the audience.

Reel Talk

Instagram has been criticized, including major organic pushback from users, because of its rapid algorithmic shift to TikTok-like short videos, which it calls Reels. 

It’s a different kind of creator energy when Instagram pushes the viral distribution of very short posts. Instagram influencers typically take time to grow their community, whereas a viral TikToker can get huge numbers and visibility without a preexisting follower base.

The most jarring change, though, was transforming from a photo-sharing app to a video-sharing app practically overnight.

While newly popular social network startup BeReal has grown over the past few months in part because some people prefer photo sharing, Instagram has plunged into video. It’s not unlike the user boost Reddit might get if (uh, when) users fleece Twitter in search of a different text-based social network.

But Instagram is not taking creator blowback as a reason to slow roll Reels. 

There is “a fair amount of urgency” to increase Reels monetization, Instagram chief Adam Mosseri tells Bloomberg. “I’m trying to balance that urgency with making sure we don’t make any mistakes by pushing too hard or too fast.”

But Wait, There’s More!

Advertisers have second thoughts about Netflix. [Insider]

TikTok denies plans for an ad-supported gaming tab. [Digiday]

Tech braces for a wintertime layoff surge. [Axios]

Conservative candidates keep pushing election denial in media and marketing – because it works. [Bloomberg]

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