• July 14, 2022
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Netflix, with Microsoft, Changes Ad Plans

Streaming media service provider Netflix has named Microsoft as the technology and sales partner to help power its first ad-supported subscription offering. It's a move that many say will change the future of TV advertising.

Netflix, whose subscriber numbers have been shrinking lately, in April announced plans to introduce a lower-priced, ad-supported subscription plan for consumers to supplement its ads-free basic, standard, and premium plans.

The partnership will give Netflix subscribers, which have been shrinking in numbers lately, "more options to access Netflix's award-winning content," according to Mikhail Parakhin, president of web experiences at Microsoft.

"Marketers looking to Microsoft for their advertising needs will have access to the Netflix audience and premium connected TV inventory. All ads served on Netflix will be exclusively available through the Microsoft platform. Today's announcement also endorses Microsoft's approach to privacy, which is built on protecting customers'; information," Parakhin wrote in a blog post yesterday announcing the deal.

"It's very early days, and we have much to work through. But our long-term goal is clear: More choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We're excited to work with Microsoft as we bring this new service to life," Netflix Chief Operating Office Greg Peters said in a statement.

Microsoft, Peters added, "has the proven ability to support all our advertising needs as we together build a new ad-supported offering. More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members."

Jay Prasad, chief strategy officer of LiveRamp, sees the Microsoft-Netflix partnership as not only altering the subscription and ad ecosystems, but also Microsoft's focus.

"This is a massive win for Microsoft and their recently purchased Xandr unit from AT&T," he says."Microsoft is set to be the global marketplace, but what isn't clear is if this will only be for non-direct sold impressions.

"I would estimate that the goal would be to start with the least interruptive ad unit types: pre- and post-roll or branded windows viewers see when transitioning to the next episode and a short and perhaps customized ad unit," Prasad continues.

"Once ad breaks open up beyond more branded experiences, Netflix would?need to integrate its world's-best content delivery network with server-side ad insertion features that also work with its?primary ad server. Microsoft doesn't have that capability at the moment" Prasad says.

But, he also thinks Netflix's focus will need to change a little. "Now that Neftlix is working with Microsoft and likely other parts of the ad tech ecosystem, they will likely start looking at data collaboration solutions that will enable the streamer to connect with its advertisers," he concludes.

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