New advertising business proposal for Disney+ and Netflix
17 October 2022
Both platforms have opened a new chapter that will break away from traditional formats. New digital partners and an advertising proposal for the new programming.
Soon there will be advertising in "Stranger Things" or "Star Wars". That is, at least, the new bet of Netflix and Disney + to strengthen themselves to the detriment of traditional networks.
After refusing advertising for a long time, Netflix accelerates the launch of its new formula, now scheduled for November 1, several US media indicated, to anticipate Disney +, which in theory would do so on December 8.
"These launches are going to create the largest premium advertising space for more than a generation," says Dallas Lawrence, of the Samba TV cabinet. "It's going to be a big time for advertisers."
"Not so long ago it was said that subscription was going to kill advertising," recalls Kevin Krim, CEO of the EDO cabinet. “Today we clearly see that it is not true.”
And the gain is considerable. Ross Benes of the Insider Intelligence firm estimates that streaming ad revenue could reach $30 billion in two years in the United States alone, and likely at least twice that globally.
The market is for now co-opted by YouTube, which received $28.8 billion in advertising in 2021.
Competitors more or less close to Netflix and Disney, such as Peacock (NBCUniversal), Paramount +, HBO Max or Discovery + have already launched versions with advertising.
But neither of these platforms competes with the two behemoths that have accumulated 220 million subscribers in the case of Netflix and 125 million in the case of Disney+ and who hope to attract new users by lowering prices.
According to an internal document cited by The Wall Street Journal, Netflix hopes to reach 40 million users by the third quarter of 2023 with its low-cost formula.
– Break traditional formats –
“Many of the people who were watching television and could be reached by ads are no longer” available to brands, because they are no longer traditional network viewers, explains Colin Dixon, editor of the specialist streaming site ScreenMedia.
Streaming "allows advertisers to reach people who have been out of their reach for some time, at a time when they are most focused," he says, because the user chooses his program and his time, unlike what happened in traditional television.
This opening could weaken historical television "that has not fully deployed a streaming-oriented strategy," warns Lawrence, referring mainly to small and medium channels, since the four big stations in the United States have developed some online presence.
But even these - ABC (owned by Disney), CBS, NBC and Fox - are going to suffer, because they were the only ones so far that could offer massive audiences to advertisers. "Once Netflix and Disney open the doors of Stranger Things, Star Wars or Marvel, we will see a stampede," says the analyst.
Furthermore, "the data you collect from streaming advertising is much deeper and richer than what's available on television today," he notes.
For all non-live content, "ads are delivered in a personalized way, which allows for further targeting," adds Krim.
Netflix and Disney + open a new chapter in which they can break with traditional formats, play with durations, location or even attract partners to create new programs.
Not to mention that the platforms offer access to dozens of countries at the same time.
“If you're a multinational, you're going to be able to have a single point of contact and buy advertising space all over the world,” says Dixon. "It's a pretty powerful offering."
As for the ability of Disney and Netflix to take market share from Facebook, Google or Amazon, Benes points out that this is something that streaming has not achieved so far.
Source: Banca y Negocios