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Netflix is playing catch-up in the AVOD game

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Netflix is playing catch-up in the AVOD game

Ah, Netflix.

What was once everyone’s favorite (and only) streaming provider is now playing catch-up in the advertising-based video on demand (AVOD) game. Sparked by a 200K subscriber loss in Q1, Netflix rather reluctantly announced they will likely enter the AVOD ecosystem. Many well-tenured executives in the TV and Streaming space saw this coming from a mile away, and Netflix is taking a bit of a beating in the upfronts, trades, and boardrooms.

But in TV, as elsewhere around the world, with a persistent pandemic, supply-chain issues, war, and social unrest, the temptation to pick away at competitors is wrong-minded. It’s even more important to bind together, support one another, and celebrate the competition that has fostered the innovation in our industry.

On that note, before we shove Netflix into the also-ran camp and focus on other platforms with built-out AVOD options, let’s revisit one of the OG streaming platforms, how they got here, and how they can move forward.

How Netflix got here

Netflix was born in 1997. You may remember the CDs of movies and documentaries you ordered which later evolved into a subscription model.  Ten years after its birth, Netflix offered titles available for streaming over the internet – which was, at the time, a novel concept. Through their recommendation engine and seeing the potential to differentiate from cable by offering another way to access premium TV, Netflix had created a new game. Netflix enjoyed years of first-to-market success and kept working to bring us original content that turned into cult favorites such as “House of Cards,” “Stranger Things,” and my personal favorite, “The Queen’s Gambit.”

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Netflix changed the way movies and shows were distributed and consumed and pushed networks to create and obtain better and stickier content, and more premium content to differentiate themselves and lure in loyal consumers. They turned entertainment upside-down.

What’s more, they challenged the TV measurement norms from the get-go, snubbing their nose at Nielsen and looking more at quantity and efficiency of content consumed. So yes, Netflix is behind in the AVOD game.  And they didn’t pivot as quickly as they needed to.

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Where Netflix stands now

So where does Netflix stand now? Let’s first talk a bit about AVOD which has been growing in prevalence and scope over the past few years. Specifically AVOD spend will be $22 billion in 2022, according to MoffettNathanson Research. What was once a “maybe” for platforms has shifted to a must. So essentially AVOD and SVOD (Subscription Video on Demand) are merging together.

There are many reasons platforms have AVOD options – but the main being the ability to provide a more affordable tier of service to consumers who want to watch the platform, but don’t want to pay the premium for an ad-less experience. The primary use of AVOD tiers is to retain and acquire new customers. Currently, AVOD is being put to the test and held to a higher bar as premium platforms such as Disney+ join the game. Disney+ has pledged their ad experience will be low – four ads per hour, which is aligned with another premiere player, HBO Max’s frequency.

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Other platforms such as the original AVOD darling Hulu are nearly 2x that load.  Platforms will be tested and forced to think harder about balancing the consumer experience with brand opportunity. How Netflix handles ad load and overall experience could speak to its future in the space.

However, for now, let’s take this time to appreciate what Netflix has done for the industry and hope that next year they join the upfronts with more content, sustained growth and that gumption they brought to the market in 2007, frequency controlled that is.

Read next: Why a Netflix ad-supported tier would be exciting for advertisers


Opinions expressed in this article are those of the guest author and not necessarily MarTech. Staff authors are listed here.


About The Author

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Sara has 17+ years of experience in digital marketing and advertising; her work has spanned client services, strategy, sales and partnerships. She has worked at large global companies such as DoubleClick (now Google) and Omnicom as well as at independent agencies such as Cramer-Krasselt managing performance and branding media strategies and large video integrations for national brands.
Sara spent time at early-stage start-ups in the credit card martech space helping them build and grow their Client Services and Partnership divisions; her work as Lead Director of Client Strategy at The Trade Desk developed her passion for all things CTV/OTT. She currently leads the TV practice at performance branding agency WITHIN and works with clients to align TV advertising strategies with their business goals. Sara has worked across multiple verticals on brands such as Panera, REI, Patagonia, Edward Jones and McDonald’s.
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How clean, organized and actionable is your data?

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90% of marketers say their CDP doesn't meet current business needs

A customer data platform (CDP) centralizes an organization’s customer data, providing a single 360-view of each consumer that engages with the company. Yet there are still data-related considerations that organizations have to make beyond what the CDP does.

“[CDPs] were designed to fill a need – to enable a marketer to easily get to the data they need to create their segmentation and then go on and mark it from that point,” said George Corugedo, CTO of data management company Redpoint Global, at The MarTech Conference. “But the issue is that CDPs really don’t take care of the quality aspects of the data.”

Maintaining data quality also impacts segmentation, campaigns and privacy compliance challenges for marketing teams that use this data.

Data quality

The data in a CDP depends on the quality of where it came from. Therefore, an organization using a CDP must also consider the quality of the data sources and reference files used to build out the CDP.

“The inevitable question is going to be, how good is this data?” said Corugedo. “How much can I trust it to make a bold decision?”

This is something that has to be on every organization’s radar. For instance, when identity resolution is used, the issue depends on the quality of the third-party reference files. If they are provided by a telecommunications company or credit bureau as the data partner, those files might only be updated quarterly.

“It’s just not an optimal solution, but every single CDP on the market uses some form of reference file,” Corugedo stated.

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It’s up to the data scientists and other team members working within the organization to own the accuracy of these data sources.

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Read next: What is a CDP?

Segmentation and other actions

The quality of the data using specific reference files and sources will vary and will impact the confidence that marketers have in creating segments and using them when deploying campaigns.

Marketers have to make this decision at a granular level, based on the trustworthiness of data from a particular lineage.

“If they have a campaign that is reliant on suspect data, they can actually delay that campaign and say maybe we wait until that data gets refreshed,” said Corugedo.

Otherwise, marketers are just “spraying and praying.”

Using rules instead of lists

The advantage of having a CDP is unification of all data. But the data is being updated all the time. Instead of deploying campaigns based on a fixed list of customers, the use of rules to define segments allows marketers to update who they engage in the campaign.

“A list, as soon as it’s detached from the database, starts to decay because it doesn’t get any updates anymore,” Corugedo, adding that using lists takes longer to execute a campaign.

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Lower quality from data that isn’t updated can have serious implications for healthcare and other industries, where accuracy is essential. 

“Instead, rules are passed through the campaign just like they would be with a list, but those rules reevaluate every time there’s a decision point to make sure that only the qualified people get the particular content at that point,” Corugedo explained.


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Privacy and regulatory compliance

Maintaining data quality through a Redpoint Global dashboard, or a similar combination of tools and data personnel, will also help an organization manage privacy.

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The crucial point is that people on the team know where the data came from and how it’s being used in campaigns. The stakes for sending out relevant messaging are high. Privacy and compliance issues raise the bar even higher.

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If you’re using a CDP, you can save headaches and extra labor by using a tool that has compliance and privacy baked in, so to speak.

“What we’ve done is embrace some of this complexity and absorb it into the environment, so the marketer never even sees it,” said Corugedo. “What we do is with every implementation, we will implement a PII vault that keeps PII data super secure, and we can anonymize the marketing database.”

This way, personal information of individual customers (PII) is never violated.

“Marketers ultimately don’t necessarily need to have visibility to PII,” Corugedo explained “They like to see it for testing purposes and making sure that it looks right and everything, but the truth is we can do that in other ways without revealing PII.”

Having a handle on data quality adds to the confidence marketing teams have in creating segments and executing campaigns, and it can also help protect the customer’s privacy and guard against regulatory infringements.

Facts not fiction: Beyond the CDP from Third Door Media on Vimeo.

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About The Author

Chris Wood draws on over 15 years of reporting experience as a B2B editor and journalist. At DMN, he served as associate editor, offering original analysis on the evolving marketing tech landscape. He has interviewed leaders in tech and policy, from Canva CEO Melanie Perkins, to former Cisco CEO John Chambers, and Vivek Kundra, appointed by Barack Obama as the country’s first federal CIO. He is especially interested in how new technologies, including voice and blockchain, are disrupting the marketing world as we know it. In 2019, he moderated a panel on “innovation theater” at Fintech Inn, in Vilnius. In addition to his marketing-focused reporting in industry trades like Robotics Trends, Modern Brewery Age and AdNation News, Wood has also written for KIRKUS, and contributes fiction, criticism and poetry to several leading book blogs. He studied English at Fairfield University, and was born in Springfield, Massachusetts. He lives in New York.

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