News & Analysis

Netflix Gets Its Own Ad Servers

The company hopes to create targeted and personalized ad experiences with its audience

Imagine viewers being told to buy an aftershave that can “shake and stir” or a piece of jewellery that could make Sanjay Leela Bhansali swoon! Well, Netflix launched its own ad tech platform 18 months ago and is now introducing its own ad server. The purpose is to sell episodic campaigns that offer personalized experiences without being repetitive. 

In the process, the streaming giant plans to take on heavyweights like Google, Amazon and even Comcast in delivering ads across the OTT platforms. What’s more, Netflix may also be severing its links with Microsoft with whom they’d partnered to develop the ad tech last year that allowed the company to hit the ground running when it launched. 

Netflix gallops while others canter

The announcement came during Netflix’ Upfronts presentation on Wednesday and led to a collective gasp of disbelief since they had only entered the ad platform business recently. It also signifies a major shake-up in the way the streaming giant is perceiving advertising as a means to broaden revenue growth. 

Upon entering the platform business with Microsoft’s support, Netflix not only grew fast but also caught up with arch rivals like Hulu that was using its own ad server for over a decade. With 270 million plus subscribers available globally, one need not look beyond it for a valid reason for the company to serve its own ads in a way that resonates with its audience. 

Ads that are non-repetitive and tell a story

In the words of Amy Reinhard, the president for advertising at Netflix, having an ad tech in-house would allow them to power the ads plan in tandem with the other divisions of the company, specifically those involved with content calendars and production. This way, they can plan ads and chase brands even while developing a content. 

“We’re being incredibly strategic about how we present ads because we want our members to have a phenomenal experience. We conduct deep consumer research to make sure we stay ahead of the competition, bringing opportunities that are better for members and better for brands,” Reinhard has said. 

We only know the “what”; the “how” is a mystery

Of course, information is scarce about how Netflix has structured its in-house solution or in what fashion it could change the way ads get delivered on the platform. What appears to be clear though is that the streaming giant would definitely move away from serving generic advertisements to its audience and repeating them across episodes. 

In fact published media reports suggest that Netflix wants to experiment with what they describe as “episodic campaigns” which essentially means serving a series of ads that themselves tell a story. And in doing so, also possibly follows the story of the web series for which they were acquired and paid for by the brand. 

This takes brand association a step deeper and allows for creative delivery of ad content that does not get boring via repetition but makes even the ad break an interesting one. Of course, it would take some doing, given that creative agencies would require to think laterally to develop such campaigns and brands may have to pay truckloads more to have it delivered. 

The company also noted during its presentation that it would be expanding its acquiring capabilities during the summer and would include Trade Desk, Google’s Display & Video 360, and Magnite as partners. These moves come close on the heels of Netflix reporting success for its ad-supported tier with over 40 million global monthly active users.