Netflix Co-CEO sketches advertising principles, holds back on detail

Any advertising product that Netflix comes up with will start in the US, will stay light, and will just be one of many iterations, according to co-CEO and chief content officer Ted Sarandos. The principles arrive at a time that certain advertising service providers are being touted as launch partners.

Why it matters

Co-CEO Reed Hastings has long resisted advertising, but with investor demands for growth becoming louder, the company now recognises that it has “left a big segment on the table”. And with the monthly fee becoming too much for some people during a cost-of-living crisis, there is now space for an advertising tier.

Speaking on stage at the Cannes Lions International Festival of Creativity, Sarandos stressed that any product would aim to be more integrated and less interruptive than the current TV ad experience. “I want our product to be better than TV,” he stated.

Signals in the noise

Sarandos was grilled on his firm’s stock performance (macroeconomic issues, he said) and streaming more widely before questioning turned to the elephant in the room.

• When: That the timing of the festival was “a bit off” relative to Netflix’s ad plans suggests we won’t have to wait long for more details. In Sarandos’ own words, we hear these will be available “sooner than later.”
• Who: A story in the Wall Street Journal suggested that Google and NBCUniversal were the frontrunners to take on the work. Sarandos was, of course, equivocal, saying the business was prioritising a “pretty easy entry to market” but that it was “talking to all of them”.
• Looking ahead: More interesting was his suggestion that if advertising “becomes important for us” then the company would consider building out its own ad systems.
• Aims: “What we do at first will not be representative of what the product will be ultimately,” he explained. Netflix will start light and “keep it simple”.

Why now?

It comes down to a mixture of economic imperatives and the belief that the audience-matching capability that has become a hallmark of the Netflix experience, along with its creative chops, can help fuel a compelling product. There’s also the fact that younger viewers, accustomed to ads on social apps and YouTube, are simply more tolerant of advertising, especially when it’s done well.

A question of sport

Will Netflix do news? Sarandos was firm that there is no real ambition within Netflix to get involved here. Sport, however, is “not a foregone conclusion”, but, to date, its involvement in sports through sport documentaries is more comfortable territory.

Reporting by SPT