Netflix has separated itself from the pack of TV streaming services, at least in the minds of its viewers, whom Netflix refers to as members.
Just hearing that “ta-dum” sound can elicit a “Pavlovian response” from viewers, AdExchanger Executive Editor Sarah Sluis said during a fireside chat with Netflix’s new VP of Advertising Nicolle Pangis.
Can Netflix do the same for advertisers?
It’s certainly trying to. Netflix recently announced its in-house ad tech – an SSP, which is Magnite, and Netflix’s own ad server – capable of bringing the Netflix-style personalization that members know from recommended shows and movies, but for advertising purposes.
The Netflix Ads Suite, as the company is calling it, is set to launch April 1, Pangis disclosed during the Cynopsis and AdExchanger CTV Connect event in New York City.
“I think this is the first time we’re actually saying it out loud,” she said during the fireside.
Since this is Netflix’s foray into ad tech, it’s only fitting to add a new three-letter acronym to the programmatic pile. “We do talk about it internally as NAS,” Pangis said.
Let the “Hit the NAS button” jokes commence.
Pangis brought more detail during the fireside on the features available with the NAS platform and how Netflix approaches advertising differently than linear broadcasters.
ADEXCHANGER: Netflix is known for its great content and a lower ad load than most streaming services. But as you launch the ads business, especially in programmatic, how do you get rewarded for having a better experience?
NICOLLE PANGIS: What we are showing in the marketplace is that our ad load is lower, but our engagement of members who are watching ads actually stays the same. So the engagement of our viewer when they start watching Netflix versus three hours later, the attention level is actually equivalent. It does not drop. And that’s inclusive of the ads experience.
So if you’re an advertiser with Netflix, the member is actually paying attention to the ad hours into the viewing experience, which I think will and is translating into better performance.
What’s new with the shift to your own ad tech stack?
Really, the whole intent of moving to proprietary tech is so that we can move faster and provide flexibility and capabilities to our advertisers. Having our own tech, we can really advance our capabilities around custom formats.
And Netflix sits on a lot of member insights that can be very valuable to advertisers and agencies. Everybody talks about relevance of advertising. Well, there’s a lot of information we know about what type of content our viewers are viewing and the advertising that might be most relevant to them.
Netflix is often compared to Amazon, which launched streaming ads around the same time. Amazon put in ads by default so there’s greater scale and lower CPMs. Marketers and agencies are rooting for Netflix, but some feel like Amazon is moving faster. What would you say to them?
I would say that Netflix is moving in a very specific direction with very specific intent. We are looking at what is best for the holistic member experience first and foremost.
And we’re very focused on expanding capabilities into programmatic, as an example. Programmatic is a way to get to the same quality content at the same price point. It is a pipe to get to Netflix content, right? Just like a direct IO is a way to get directly to Netflix content. And there’s a variety of ways that we will make those available.
Our goal is to make it easy to buy Netflix ads. Because we know advertisers and agencies are leaning into fewer and more strategic partners. And obviously we are very focused on being one of them.
Netflix seems to have taken a walled-garden approach like YouTube, to not allow ad tags on inventory. How are you balancing the things on buyers’ wish lists with what you’re willing to build?
We’re moving to our own tech stack, but we’re integrated with DV360, with The Trade Desk and with Xandr. We’re bringing in third-party data right off the bat, and there will be more.
“Walled garden” implies no integration and no moving [of data], and we’re doing a lot of that.
We will, obviously, always maintain the member experience and privacy. But we are doing lots of partner integrations to allow appropriate levels of information to flow through the ecosystem.
You mentioned custom ad formats. Do you have any examples? Would a “pause ad” be one piece of the puzzle, where it’s maybe not part of that four minutes of ads per hour of viewing?
Pause ads are also part of the four minutes per hour. But, again, we’re just getting started. The move to our proprietary tech is very intentional to be able to do things differently than the rest. So who knows what those formats will be.
We know Netflix has the most amazing taxonomy in terms of very specific types of content recommendations. Are advertisers able to activate on any kind of slices of that taxonomy today?
One data point I didn’t know until I joined is that there’s not any two members who get the same recommendations. Literally, the back-end tech updates based on an individual’s viewership. So everybody literally is seeing their own view. Which is pretty tremendous, if you think just technically how much is going on in the background.
Those member insights are what is going to be also available within our tech stack. To be able to be leveraged by advertisers and aligned with content and genres that members are most interested in. So that extension of what you see in your Netflix recommendations will be available for purposes of advertising as well.
With linear TV, the buyer knows the other advertisers in the pod, where in the pod the ad served and what show was on. But none of that is in streaming. Is there any kind of bone you can throw advertisers?
One thing that the industry has to sort of wrap its head around is that bringing linear thinking to digital is not the answer. In digital, you’re using different data than you’re using in linear to make these decisions.
TV advertisers are buying a specific program and time of day.
But in streaming, typically, you’re buying in genre or a group of shows, or you’re buying an audience. It’s less about the time or the spot, and more about who you’re looking to find when they show up. And in those cases, you’re targeting more of a one-to-one or at least groupings of audiences.
We are actually solving for a different answer in digital based on audiences and people showing up at different times, because it’s asynchronous, versus linear, which is all at one time.
This interview has been edited and condensed.
