How Netflix Can Win With Both Advertisers and Viewers
First, let’s be crystal clear: Neither Reed Hastings nor Netflix may need my advice. They have built and operated one of the most extraordinary companies of the past 50 years.
However, I will tell you what I think are some of the key issues that Netflix faces in building a successful ad-supported business.
Put strategy first. Yes, culture eats strategy for lunch. And yes, Netflix has one of the most unique and powerful cultures in business today. However, building an ad-supported strategy is not something that should be ad-hoc, improvised or copied. Netflix should take its time and really think through its strategy here. This is one of the times that it’s best to go slower now, and faster later.
Leadership must come next. Whoever carries the Netflix-branded ad sales bag is going to matter a lot to the company’s positioning and reputation in the market. This person should represent Netflix to advertisers the way the streaming brand represents itself to its subscribers: as a premium, smart, innovative, commanding, absolute market leader. Hire the right leaders, and the rest of the team, the premium pricing, and the revenue and profits will follow.
Viewer-first experience. Nobody is super-excited about the incredible over-frequency of ads that we all get today on most of the leading ad-supported streaming services. Nor are folks excited about those direct-response advertisers we all see, either.
Netflix should have none of that. It should make delivering the most viewer-friendly ad experience part of its promise and mission. If it does that, viewer loyalty, advertisers’ satisfaction and premium cost-per-thousand pricing will certainly follow.
Be different. Plugging into everybody else's programmatic platforms and looking like all the other ad-supported streamers might be the easiest path to early success, but it won’t enable Netflix to truly win and own the market. It needs to take some risks and do some core things differently.
That’s what folks would expect from the company that revolutionized home entertainment. Executives at Netflix should expect no less of themselves.
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