Observed Signal · Dec 5, 2022 · Product Launch · Source: OnlineMarketing.de · Impact: 3/5 · Sentiment: Positive
Netflix CEO: Ads should have come earlier
Netflix has rolled out an ad-supported subscription in 12 countries, aiming to boost user growth amid rising streaming competition. At the DealBook Summit, Netflix co-CEO Reed Hastings admitted the company should have pivoted to advertising years earlier, highlighting Hulu as a model that lowers prices for consumers. The launch coincides with plans to charge for password sharing in 2023 to bolster monetization. The piece notes that Netflix’s stock fell about 50% in 2022 before a roughly 37% rebound in recent months, and Hastings argued that traditional TV ads still reach audiences who don’t watch linear television. Framed within the broader streaming monetization trend, the ad-supported tier could influence subscriber growth and competitive dynamics across the industry.
Netflix's ad-supported rollout represents a notable shift toward ad-based monetization in streaming, with potential implications for the wider AdTech/MarTech ecosystem.
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Key Takeaways & Evidence Grounding
- Netflix launched an ad-supported subscription in 12 countries in November.
- Reed Hastings stated Netflix should have adopted an ad-supported model years earlier at the DealBook Summit.
- Netflix plans to enforce password-sharing payments in 2023.
- Netflix stock fell about 50% in 2022 and recovered about 37% in recent months.
- Hulu is cited as a proven model for lowering prices via advertising.
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OAAA Launches Programmatic Center of Excellence for DOOH
AI is pushing advertising back into physical spaces due to declining trust in online content, the rise of AI answer engines that bypass websites, and the growth of agentic AI. Out-of-home (OOH) and digital out-of-home (DOOH) advertising are gaining renewed relevance, with US OOH revenue up 10.7% YoY to $3.16B in Q2 and DOOH up 18.5%, representing nearly 40% of category revenue. To guide this evolution, the OAAA has launched a Programmatic & Automation Center of Excellence led by COO Patrick Dolan, focusing on standardization, workflow automation, agentic AI, reporting/attribution, and omnichannel/retail media integration. The initiative aims to automate both programmatic and static OOH processes, addressing friction points. However, this trend raises concerns about consumer opt-out options and the over-commercialization of public spaces, as noted by Ezra Klein.
Publishers Use Registration Walls to Fight AI Traffic Decline
As referral traffic from search engines declines, especially due to AI Overviews, publishers are increasingly turning to registration walls to convert anonymous visitors into known users. This strategy aims to deepen engagement, gather first-party data for better ad targeting, and potentially increase programmatic ad rates. The Verge plans to test a hard registration wall on a cohort of readers. Publishers report that registered users can yield ad rates up to eight times higher. However, some publishers found that registration walls do not always lead to subscriptions, and for many, the revenue from subscriptions is insufficient to offset traffic losses. The trend reflects a broader shift towards first-party data and known audiences in response to AI-driven changes in search and referral traffic.
MiQ's Moe Chughtai on Navigating Total TV Fragmentation
In an interview, Moe Chughtai, Global Vice President at MiQ, discusses how advertisers navigate the fragmented landscape of TV, streaming, social video, and broadcast. He emphasizes the necessity of a unified data strategy and measurement framework that elevates data above individual platforms to allocate media spend effectively. Chughtai highlights the challenge of buying across multiple platforms (e.g., Netflix via The Trade Desk, Prime Video via Amazon DSP, YouTube via Google) and the importance of owning data and using external measurement solutions to avoid blind spots. He also notes YouTube's dominance, with nearly 60% of MiQ's global YouTube ads served on TV screens, and predicts continued opening of walled gardens over the next two years.
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