Advertising Digital Publishing
5 mins read

Not everyone can be Netflix: Should publishers consider an ad subscription model?

The big four streaming platforms – Disney, Amazon Prime Video, YouTube and Netflix –  attracted record viewership shares according to recent figures with streaming in aggregate claiming more than one-third of total TV time. It’s clear that when it comes to playing in the big leagues, some streaming platforms are way ahead. Netflix is a ubiquitous service, and its popularity is such that it’s entered our cultural lexicon in an era-defining way.  

By now, the power of its brand and its relationship with its customers has made Netflix one of the most trusted streaming platforms synonymous with its vast content library and a truly personalised offering. Netflix’s audience is entirely authenticated, meaning customers create an account and sign in to access their content. This exchange of personal data for content and personalization is largely unchallenged by its subscribers who recognize the value they receive. But the winds of change are blowing and those who are first to market often have a price to pay when the competition catches up. 

Netflix recently announced a new subscription plan that will introduce ads. They are not the first to do this, with Disney having ads on its two streaming giants, Hulu and Disney+. It will keep its basic ad-free offerings, but the ad-tier, introduced in 2023 in a new partnership with Microsoft, will be cheaper.  

Streaming platforms are increasingly moving towards ad-based subscription services for their customers and with that comes a big question. What value could this bring to its viewers on their platform?  

How, in this new, ad-streaming market, will Netflix stay a step ahead?  

What to do in 2022? 

Netflix is uniquely fortunate to have an excellent value exchange and to have largely created the streaming market – no doubt contributing to its phenomenal success. It stands head and shoulders above what other publishers ask of customers and what they get in return.  

But not every company is Netflix – so how do other publishers deal with the situation? They can learn from Netflix’s solid ‘best practice’ value exchange model to develop their own modern content marketing models with first-party data strategies that attract and keep consumers thanks to the requisite benefits on offer. 

The value exchange 

We all know by now that data is not just a valuable asset but also a currency. Consumers are essentially paying to access, view and read content in return for their data. But part of making this a truly fair exchange is giving consumers something in return – something they can’t find anywhere else.  

For example, during the pandemic, The Guardian Media Group’s revenues climbed and the publication has seen strong digital advertising income due to prioritisation of its strong data capabilities. Thanks to this smart data approach and innovative content marketing, The Guardian has scaled quality content with a fair value exchange.  

This kind of unique offering sets it apart in a news world where you can simply choose to read a story elsewhere if pushed to register or create an account – so publishers must continue to think creatively and offer what others are not, from innovative new formats to robust content marketing strategies that engage their audience. 

Netflix’s mountain of data potential 

With the launch of its ad-tier, Netflix will become one of the largest ad-supported publishers overnight. Brands spend millions on advertising campaigns with a lack of precision and efficiency with unreliable third-party data. But now, with first-party targeting, advertisers will have the confidence they’re getting bang for their buck. 

ITV and Channel 4 have already had notable success here, creating custom data-matching solutions that enable advertisers to use their own first-party data to identify high-value audience segments across their on-demand services. The proof is in the numbers: a recent study explored how Channel 4 and Deliveroo implemented a national advanced TV advertising campaign across All 4 using their first-party data in this way that resulted in a 20% incremental increase in app sign-ups.

Netflix should look to emulate this model, allowing advertisers to tap into their extensive audience data. Whether it’s interactive content like the Black Mirror: Bandersnatch, the sci-fi series Stranger Things, or alternative comedy programmes like Superstore, Netflix holds an extensive range of data insights from rate stats, scrolling data, browsing data, search usage and many more factors. Advertisers will be able to navigate this adaptable content and partner with Netflix for targeting specific niche communities of highly engaged followers.  

We’ve seen that where Netflix goes, other streamers follow. And what we’re seeing right now is a fall in video streaming subs as more and more people cancel, figures which will no doubt rise in the face of a difficult cost of living crisis in the UK. The streaming market has seen more than 3 million Brits cancel their video streaming paid subscriptions since the beginning of this year. Netflix has lost around 200,000 in a period it was forecasted to gain two million and hopes its low-tier ad-supported subscription will stem the flow whilst bringing in revenue from advertisers. 

The ever-evolving world of digital advertising 

We don’t have a crystal ball when it comes to trends in the world of digital advertising, but we can keep a savvy eye on developments in the works that give us a pretty good idea of what’s coming down the track. 

With Netflix’s move towards an ad subscription model, we can expect to see even more opportunities for digital advertising and data collaboration across streaming platforms.  

The power of Netflix’s brand will evolve as they continue a data-centric approach to targeted advertising for the best possible value exchange for both customers, Netflix, and its advertising partners – and this will set the tone for other publishers around what an acceptable value exchange is. This will continue to enhance the viewer experience in the way Netflix subscribers have come to expect.  

Ben Cicchetti
VP Corporate Marketing, InfoSum

InfoSum is the world’s leading data collaboration platform and the only secure data clean room infrastructure, empowering global businesses to safely use their first-party data at scale to deliver better customer experiences. InfoSum is the only solution that enables true multi-party computation and analysis across unlimited data sets to unlock the full potential of customer data without risk of exposure or misuse. InfoSum’s patented Safe Audience Transfer ensures the complete non-movement of data to create the most protected, most connected, and most accessible data collaboration network.