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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.

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.

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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

Netflix is playing catch up in the AVOD game
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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MARKETING

Trends in Content Localization – Moz

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Trends in Content Localization - Moz

Multinational fast food chains are one of the best-known examples of recognizing that product menus may sometimes have to change significantly to serve distinct audiences. The above video is just a short run-through of the same business selling smokehouse burgers, kofta, paneer, and rice bowls in an effort to appeal to people in a variety of places. I can’t personally judge the validity of these representations, but what I can see is that, in such cases, you don’t merely localize your content but the products on which your content is founded.

Sometimes, even the branding of businesses is different around the world; what we call Burger King in America is Hungry Jack’s in Australia, Lays potato chips here are Sabritas in Mexico, and DiGiorno frozen pizza is familiar in the US, but Canada knows it as Delissio.

Tales of product tailoring failures often become famous, likely because some of them may seem humorous from a distance, but cultural sensitivity should always be taken seriously. If a brand you are marketing is on its way to becoming a large global seller, the best insurance against reputation damage and revenue loss as a result of cultural insensitivity is to employ regional and cultural experts whose first-hand and lived experiences can steward the organization in acting with awareness and respect.

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How AI Is Redefining Startup GTM Strategy

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How AI Is Redefining Startup GTM Strategy

AI and startups? It just makes sense.

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More promotions and more layoffs

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More promotions and more layoffs

For martech professionals salaries are good and promotions are coming faster, unfortunately, layoffs are coming faster, too. That’s according to the just-released 2024 Martech Salary and Career Survey. Another very unfortunate finding: The median salary of women below the C-suite level is 35% less than what men earn.

The last year saw many different economic trends, some at odds with each other. Although unemployment remained very low overall and the economy grew, some businesses — especially those in technology and media — cut both jobs and spending. Reasons cited for the cuts include during the early years of the pandemic, higher interest rates and corporate greed.

Dig deeper: How to overcome marketing budget cuts and hiring freezes

Be that as it may, for the employed it remains a good time to be a martech professional. Salaries remain lucrative compared to many other professions, with an overall median salary of $128,643. 

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Here are the median salaries by role:

  • Senior management $199,653
  • Director $157,776
  • Manager $99,510
  • Staff $89,126

Senior managers make more than twice what staff make. Directors and up had a $163,395 median salary compared to manager/staff roles, where the median was $94,818.

One-third of those surveyed said they were promoted in the last 12 months, a finding that was nearly equal among director+ (32%) and managers and staff (30%). 

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Extend the time frame to two years, and nearly three-quarters of director+ respondents say they received a promotion, while the same can be said for two-thirds of manager and staff respondents.

Dig deeper: Skills-based hiring for modern marketing teams

Employee turnover 

In 2023, we asked survey respondents if they noticed an increase in employee churn and whether they would classify that churn as a “moderate” or “significant” increase. For 2024, given the attention on cost reductions and layoffs, we asked if the churn they witnessed was “voluntary” (e.g., people leaving for another role) or “involuntary” (e.g., a layoff or dismissal). More than half of the marketing technology professionals said churn increased in the last year. Nearly one-third classified most of the churn as “involuntary.”

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Men and Women

Screenshot 2024 03 21 124540Screenshot 2024 03 21 124540

This year, instead of using average salary figures, we used the median figures to lessen the impact of outliers in the salary data. As a result, the gap between salaries for men and women is even more glaring than it was previously.

In last year’s report, men earned an average of 24% more than women. This year the median salary of men is 35% more than the median salary of women. That is until you get to the upper echelons. Women at director and up earned 5% more than men.

Methodology

The 2024 MarTech Salary and Career Survey is a joint project of MarTech.org and chiefmartec.com. We surveyed 305 marketers between December 2023 and February 2024; 297 of those provided salary information. Nearly 63% (191) of respondents live in North America; 16% (50) live in Western Europe. The conclusions in this report are limited to responses from those individuals only. Other regions were excluded due to the limited number of respondents. 

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Download your copy of the 2024 MarTech Salary and Career Survey here. No registration is required.

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