The streaming wars are already hot, and now they’re heating up even more.
In the past week alone, Netflix hosted its first earnings call since launching ads in November, and Disney held its first Tech & Data Showcase since rolling out an ad-supported Disney+ late last year.
But it’s still too early to name winners and losers. “Maybe at the end of the year,” Naveen Sarma, senior director at S&P Global Ratings, told me earlier this week.
For now, new AVOD entrants are busy getting themselves ready to compete for ad dollars during this year’s upfronts.
It wasn’t so long ago that Netflix said it would never have ads and now the streamer is upending its entire business model to embrace AVOD. It’s a very a tall order, but, as Sarma pointed out, Netflix has an advantage over traditional broadcasters: a nearly 10-year head start on generating free cash flow from streaming.
Disney, meanwhile, is attempting to gain its competitive edge with programmatic ad tech, and Netflix will need better ad targeting and measurement to square up, Sarma said.
Channel the Force
Disney has been investing its own ad tech stack since 2021, including its audience ID graph and its programmatic exchange, DRAX.
This year, Disney moved up its annual tech and data pony show to highlight its programmatic prowess ahead of the upfronts. Disney also just shared its plans to bring Hulu’s ad targeting capabilities to ad-supported Disney+ in the spring. (Right now, Disney+ buyers can only target by age.)
When I tuned in to Disney’s Tech & Data Showcase on Wednesday, the broadcaster had lots to say about measurement, programmatic, interoperability and clean rooms.
Disney named EDO as a preferred partner for outcome-based measurement, announced Unilever as the first advertiser to test its integration with UID2 and touted the growing demand for its clean room.
Measure up
Streamers clearly have big AVOD ambitions. Unfortunately, though, measurement is still a mess.
“And Nielsen is a disaster,” Sarma told me.
But tell Netflix, which just expanded its partnership with Nielsen.
The streamer also only offers basic targeting (by country and genre) and barely shares viewership information with content suppliers, let alone advertisers, said Sarma, who noted that buyers won’t keep spending on Netflix without more information on ad performance.
Netflix says it’s working on it – and, hey, there has to be a reason Netflix was able to poach big names in advertising, including Jeremi Gorman and Peter Naylor, who both came over from Snap last year.
If Netflix wasn’t planning to evolve beyond the basics, Gorman wouldn’t have joined the company, she said onstage at the IAB’s Leadership Summit in Florida earlier this week.
“What Netflix launched with is not indicative of our long-term plans,” Gorman said.
Fair enough. But what I’m wondering is this: How will Netflix’s new ad platform stand up at the upfronts?
Let me know what you think. Hit me up at [email protected].
