How Netflix’s Entry into Advertising Will Shape the Future of TV Marketing

3
at
3
minutes
Technical Level
August 3, 2022
3
minutes
Technical Level
August 3, 2022
Curt Larson
Chief Product Officer

The following article was originally featured in StreetFight Magazine by Joseph Zappa and published on August 3, 2022.

Netflix’s imminent dive into the world of advertising will initiate the video advertising industry’s biggest event since the rise of TikTok. Curt Larson, chief product officer at omnichannel supply side platform Sharethrough, believes Netflix will push the whole TV ad industry forward.

Here’s my conversation with Larson on Netflix’s move and the future of TV advertising.

You see Netflix’s entry into advertising as having broad implications for the TV advertising industry. How so?

Netflix’s entry intro advertising will impact the TV advertising industry for a variety of reasons. So far, CTV has adopted the same design paradigm as linear TV when it comes to ads by continuing to show interruptive 15 and 30 second ad breaks that display full-screen, advertiser content. This ignores the innovation that a digitally connected smart device makes possible in terms of displaying creative, new ad formats.

Netflix has a massive opportunity to experiment with new ad formats at scale and from that scale potentially push new ad formats into the entire ecosystem. So, if advertisers start creating assets designed for new contexts, they will have those assets available to run on other services besides Netflix.

As interruptive ad breaks have become widely used, consumers are not paying attention or interacting with currents ads. Better ad experiences can drive platform adoption and in turn accelerate innovation on all platforms.  

What are some of the innovative ways advertisers can make TV ads more effective? 

Given the success Netflix has seen with its recommendation algorithms, we’ll likely see it extend that approach to its rollout of ads. Interruptive ads can be jarring and increase the likelihood that viewers will check their phones or grab a snack during commercial breaks.

By ensuring the ad is relevant to the content they are already watching and displaying ads on a small portion of the screen while a show or movie is playing, Netflix will be able to keep users engaged during a time when they’d typically become distracted. Additionally, there’s an opportunity to take advantage of secondary experiences, such as channel guides, pause screens, and screen savers, which are mostly untapped for ad inventory and are also non-interruptive.

How crucial is interactivity to the future of TV advertising? 

For now, interactivity will remain a small part of the overall ad experience due to the inherent, passive experience of watching TV. That said, interactivity will be extremely significant to the future of TV advertising, especially as consumers become even more accustomed to the personalized nature of their social media feeds, where the content is always fresh, a thumb-scroll away, and underpinned by their social networks.

Innovations in the past couple of years have made great progress with enhancing interactions consumers have with ads. For example, QR codes allow consumers to engage when they’re interested in a brand or product, and they bridge the critical TV-to-phone divide. Other technologies need to focus more on the TV-to-phone divide for interactivity, and one possible step to breaking that divide would be to push an alert to a user’s phone if the user clicks OK for a particular ad with their TV remote.

Most streaming services, like Netflix, have a phone app to stream their programs already, so the app could be utilized to push alerts after ads come up.

Do you see developments like this transforming TV into more of a performance channel?

Innovations that bridge the TV-to-phone divide like QR codes and phone alerts can make inroads to TV becoming more of a performance channel in the future. However, it will take time to shift the consumer mindset away from the traditional lean-back, passive experience.

That said, demand is strong for branding, and TV ads are likely to stay more branding-focused, but the interactivity within those ads can make progress toward transforming TV into more of a performance channel.

The following article was originally featured in StreetFight Magazine by Joseph Zappa and published on August 3, 2022.

Netflix’s imminent dive into the world of advertising will initiate the video advertising industry’s biggest event since the rise of TikTok. Curt Larson, chief product officer at omnichannel supply side platform Sharethrough, believes Netflix will push the whole TV ad industry forward.

Here’s my conversation with Larson on Netflix’s move and the future of TV advertising.

You see Netflix’s entry into advertising as having broad implications for the TV advertising industry. How so?

Netflix’s entry intro advertising will impact the TV advertising industry for a variety of reasons. So far, CTV has adopted the same design paradigm as linear TV when it comes to ads by continuing to show interruptive 15 and 30 second ad breaks that display full-screen, advertiser content. This ignores the innovation that a digitally connected smart device makes possible in terms of displaying creative, new ad formats.

Netflix has a massive opportunity to experiment with new ad formats at scale and from that scale potentially push new ad formats into the entire ecosystem. So, if advertisers start creating assets designed for new contexts, they will have those assets available to run on other services besides Netflix.

As interruptive ad breaks have become widely used, consumers are not paying attention or interacting with currents ads. Better ad experiences can drive platform adoption and in turn accelerate innovation on all platforms.  

What are some of the innovative ways advertisers can make TV ads more effective? 

Given the success Netflix has seen with its recommendation algorithms, we’ll likely see it extend that approach to its rollout of ads. Interruptive ads can be jarring and increase the likelihood that viewers will check their phones or grab a snack during commercial breaks.

By ensuring the ad is relevant to the content they are already watching and displaying ads on a small portion of the screen while a show or movie is playing, Netflix will be able to keep users engaged during a time when they’d typically become distracted. Additionally, there’s an opportunity to take advantage of secondary experiences, such as channel guides, pause screens, and screen savers, which are mostly untapped for ad inventory and are also non-interruptive.

How crucial is interactivity to the future of TV advertising? 

For now, interactivity will remain a small part of the overall ad experience due to the inherent, passive experience of watching TV. That said, interactivity will be extremely significant to the future of TV advertising, especially as consumers become even more accustomed to the personalized nature of their social media feeds, where the content is always fresh, a thumb-scroll away, and underpinned by their social networks.

Innovations in the past couple of years have made great progress with enhancing interactions consumers have with ads. For example, QR codes allow consumers to engage when they’re interested in a brand or product, and they bridge the critical TV-to-phone divide. Other technologies need to focus more on the TV-to-phone divide for interactivity, and one possible step to breaking that divide would be to push an alert to a user’s phone if the user clicks OK for a particular ad with their TV remote.

Most streaming services, like Netflix, have a phone app to stream their programs already, so the app could be utilized to push alerts after ads come up.

Do you see developments like this transforming TV into more of a performance channel?

Innovations that bridge the TV-to-phone divide like QR codes and phone alerts can make inroads to TV becoming more of a performance channel in the future. However, it will take time to shift the consumer mindset away from the traditional lean-back, passive experience.

That said, demand is strong for branding, and TV ads are likely to stay more branding-focused, but the interactivity within those ads can make progress toward transforming TV into more of a performance channel.

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About Behind Headlines: 180 Seconds in Ad Tech—

Behind Headlines: 180 Seconds in Ad Tech is a short 3-minute podcast exploring the news in the digital advertising industry. Ad tech is a fast-growing industry with many updates happening daily. As it can be hard for most to keep up with the latest news, the Sharethrough team wanted to create an audio series compiling notable mentions each week.

The following article was originally featured in StreetFight Magazine by Joseph Zappa and published on August 3, 2022.

Netflix’s imminent dive into the world of advertising will initiate the video advertising industry’s biggest event since the rise of TikTok. Curt Larson, chief product officer at omnichannel supply side platform Sharethrough, believes Netflix will push the whole TV ad industry forward.

Here’s my conversation with Larson on Netflix’s move and the future of TV advertising.

You see Netflix’s entry into advertising as having broad implications for the TV advertising industry. How so?

Netflix’s entry intro advertising will impact the TV advertising industry for a variety of reasons. So far, CTV has adopted the same design paradigm as linear TV when it comes to ads by continuing to show interruptive 15 and 30 second ad breaks that display full-screen, advertiser content. This ignores the innovation that a digitally connected smart device makes possible in terms of displaying creative, new ad formats.

Netflix has a massive opportunity to experiment with new ad formats at scale and from that scale potentially push new ad formats into the entire ecosystem. So, if advertisers start creating assets designed for new contexts, they will have those assets available to run on other services besides Netflix.

As interruptive ad breaks have become widely used, consumers are not paying attention or interacting with currents ads. Better ad experiences can drive platform adoption and in turn accelerate innovation on all platforms.  

What are some of the innovative ways advertisers can make TV ads more effective? 

Given the success Netflix has seen with its recommendation algorithms, we’ll likely see it extend that approach to its rollout of ads. Interruptive ads can be jarring and increase the likelihood that viewers will check their phones or grab a snack during commercial breaks.

By ensuring the ad is relevant to the content they are already watching and displaying ads on a small portion of the screen while a show or movie is playing, Netflix will be able to keep users engaged during a time when they’d typically become distracted. Additionally, there’s an opportunity to take advantage of secondary experiences, such as channel guides, pause screens, and screen savers, which are mostly untapped for ad inventory and are also non-interruptive.

How crucial is interactivity to the future of TV advertising? 

For now, interactivity will remain a small part of the overall ad experience due to the inherent, passive experience of watching TV. That said, interactivity will be extremely significant to the future of TV advertising, especially as consumers become even more accustomed to the personalized nature of their social media feeds, where the content is always fresh, a thumb-scroll away, and underpinned by their social networks.

Innovations in the past couple of years have made great progress with enhancing interactions consumers have with ads. For example, QR codes allow consumers to engage when they’re interested in a brand or product, and they bridge the critical TV-to-phone divide. Other technologies need to focus more on the TV-to-phone divide for interactivity, and one possible step to breaking that divide would be to push an alert to a user’s phone if the user clicks OK for a particular ad with their TV remote.

Most streaming services, like Netflix, have a phone app to stream their programs already, so the app could be utilized to push alerts after ads come up.

Do you see developments like this transforming TV into more of a performance channel?

Innovations that bridge the TV-to-phone divide like QR codes and phone alerts can make inroads to TV becoming more of a performance channel in the future. However, it will take time to shift the consumer mindset away from the traditional lean-back, passive experience.

That said, demand is strong for branding, and TV ads are likely to stay more branding-focused, but the interactivity within those ads can make progress toward transforming TV into more of a performance channel.

About Calibrate—

Founded in 2015, Calibrate is a yearly conference for new engineering managers hosted by seasoned engineering managers. The experience level of the speakers ranges from newcomers all the way through senior engineering leaders with over twenty years of experience in the field. Each speaker is greatly concerned about the craft of engineering management. Organized and hosted by Sharethrough, it was conducted yearly in September, from 2015-2019 in San Francisco, California.

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Curt Larson
Chief Product Officer

About the Author

Curt Larson has over 20 years of career experience in technology and product management. After spending 5 years at Deloitte Consulting managing large-scale systems implementation projects, he led the rollout of new mobile handsets and services for Vodafone Japan. He then moved to Silicon Valley and led several product management teams, including as a founding employee at Jibe mobile (now Google), growing and taking RingCentral public, and 10 years at Sharethrough, where he led the creation of the first native exchange and guided Sharethrough to a programmatic business model. He has co-authored numerous programmatic specs with the IAB and is active in the industry. He has experience leading product, UX, analytics, business development, operations, marketing, publisher sales and engineering. He sits on the board of the directors of the IAB Tech Lab, helping guide their work to support the industry through technology standards and solutions.

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