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Finally, some details on Netflix’s ad-supported offering — but buyers are stunned at what they’re hearing

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Finally, some details on Netflix’s ad-supported offering — but buyers are stunned at what they’re hearing

Netflix’s move to hire a dynamic duo to oversee its global ad sales ambitions couldn’t come at a better — or worse — time. At last, media buyers are finally getting the information they need to start making plans to spend clients’ ad dollars on what’s been a highly anticipated launch.

But the buyers Digiday reached, who spoke on condition of anonymity to speak freely, were shocked at some of what Netflix is asking for — namely a $65 CPM that’s higher than last year’s Super Bowl, along with a lack of third-party measurement and very humble growth expectations.

At least the hiring of Snap executives Jeremi Gorman and Peter Naylor, two highly regarded digital and streaming veterans who become, respectively, president of worldwide advertising and vp ad sales, is providing buyers with answers, even if those buyers don’t like them all. Both executives start immediately.

One big surprise is the relative immediacy of the new subscription ad-supported tier, which is apparently slated to launch Nov. 1.

What now, Microsoft?

Microsoft, whose Xandr unit was recruited in July to be the ad-sales partner, has been struggling to answer questions until now, frustrating buyers whose clients are asking to appear against Netflix content.

One buyer observed that the hiring of Gorman and Naylor indicates Netflix will ultimately take over the external ad sales effort, which could relegate Microsoft/Xandr to the role of developing the back-office end of the effort.

Indeed, few details are widely known about the extent of Microsoft Advertising’s input, which is generally regarded as not being the strongest of video sales forces. “[The Microsoft team] keeps throwing Netflix under the bus,” said one buyer. “‘We don’t know that… [Netflix] hasn’t told us that.’ They’re not the most dynamic sales organization around, so when they’ve got somebody who’s not sharing information, it’s a really dual-edged sword.”

For instance, once Nov. 1 rolls around, buyers are already speculating about what Microsoft’s role will actually be: integrating its ad server, making Netflix’s inventory available, or will it make full (and exclusive) use of its Xandr assets — mimicking a walled garden?

One buyer thinks its role will remain back-office only. “That was what Xandr did way back when it was AppNexus — they built platforms for others,” said the buyer. “Microsoft has this window of time to convince Netflix that they are the right ad serving platform. That to me was very revealing in these ad hires — the fact that… you didn’t see Microsoft hire a head video ad sales, Netflix did.”

The details of Netflix’s pitch

It seems Gorman and Naylor, who have worked together for two years now at Snap, have already had some impact on the sales approach, in that buyers are now finally getting some details they’ve been asking for over the last month but Microsoft/Xandr had been unable to answer. Here’s what we know:

  • The ad-supported tier will launch Nov. 1, 2022 (perhaps as a means to beating Disney+’s ad-supported tier, which launches in December)
  • Execs are hopeful they’ll have 500,000 subscribers by the end of 2022 (a very modest number given Netflix’s 220 million or so total sub count)
  • There will be no third-party measurement partner at the outset
  • Netflix is now providing a total switch in positioning from telling buyers clients would cap out at $20 million spend to declaring $20 million the base amount around which to negotiate
  • The asking CPM is $65

You’re asking for what? In this market?

It’s the $65 CPM for untested inventory — an amount that one buyer noted is higher than the asking price for last year’s Super Bowl (which was closer to $56) — that shocked buyers the most. 

The current scatter market, according to one major video buyer who also declined to speak on the record, is soft for a number of reasons, so this doesn’t seem to be the right time to be asking for such an astronomical rate.

“Unfortunately, we’re seeing a fair amount of slippage from our [upfront] hold orders, and with a couple of clients, it’s significant money,” said the buyer. “Some of it is because of economic concerns, some are delays in drug launches. Some are cost of goods, some are business concerns, some are unique situations of a plant burning down. Everybody seems like they’ve got a different problem. Most of the hit is in fourth quarter.”

That means there’s even more available inventory working the Q3 marketplace than initially expected, which drives pricing further down. Even performance marketers are feeling the softness of the scatter market, said Raphael Rivilla, chief media officer of independent agency Marcus Thomas. 

“On performance clients, we’ve seen on average a 4% CPM drop from 2021 to 2022, but looking at just the last month, we’ve seen an 11% drop in costs, which makes it easier to hit a hard KPI,” said Rivilla. “For our brand awareness clients, we’ve seen on average 32% drop in CPMs from 2021 to 2022, and around a 14% drop in the last month.”

That didn’t stop Netflix/Microsoft from pounding the proverbial pavement. Digiday previously reported that Microsoft and Netflix executives had organized “hush-hush” briefings with key Madison Avenue decision makers, including programmatic specialists. The duo’s efforts have yet to satiate the buy-side’s appetite for details, in particular, questions remain over how much automation will play a part in the offering. Speaking earlier this month, one described attempts to woo Madison Avenue as “chaos” with little (if any) details on what ad placements would be offered.

The news that no third-party measurement firm would be recruited, at least at the outset of the new ad-supported tier, wasn’t greeted with cheers by buyers who remain skeptical of the attractive, but still fundamentally unproven inventory.

The marketplace has changed

Not helping matters, noted one buyer, is that both Gorman and Naylor for the last two years have been out of the premium video ad sales marketplace, and a lot has changed during that time. But they both have significant experience that predates their Snap tenures — for example, Naylor is widely credited with putting Hulu on the map of buyers and clients during his tenure there.

But the bottom line is, clients are asking to get onto Netflix, despite current buyer concerns. “Water has to find its level,” said one buyer, optimistic that Netflix will be more flexible with pricing once it’s in market.

“We want to advertise on Netflix,” the buyer added. “It’s just they could have come out with something reasonable and then everything could have moved more smoothly. But that’s not what they did.”

https://digiday.com/?p=464086

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NASA Says Hurricane Didn’t Hurt Artemis I Hardware, Sets New Launch Window

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NASA Says Hurricane Didn’t Hurt Artemis I Hardware, Sets New Launch Window

NASA’s Artemis I moon mission launch, stalled by Hurricane Ian, has a new target for takeoff. The launch window for step one of NASA’s bold plan to return humans to the lunar surface now opens Nov. 12 and closes Nov. 27, the space agency said Friday. 

The news comes after the pending storm caused NASA to scrub the latest Artemis I Iaunch, which had been scheduled for Sunday, Oct. 2. As Hurricane Ian threatened to travel north across Cuba and into Florida, bringing rain and extreme winds to the launch pad’s vicinity, NASA on Monday rolled its monster Space Launch System rocket, and the Orion spacecraft it’ll propel, back indoors to the Vehicle Assembly Building at Florida’s Kennedy Space Center. 

The hurricane made landfall in Florida on Wednesday, bringing with it a catastrophic storm surge, winds and flooding that left dozens of people dead, caused widespread power outages and ripped buildings from their foundations. Hurricane Ian is “likely to rank among the worst in the nation’s history,” US President Joe Biden said on Friday, adding that it will take “months, years, to rebuild.”

Initial inspections Friday to assess potential impacts of the devastating storm to Artemis I flight hardware showed no damage, NASA said. “Facilities are in good shape with only minor water intrusion identified in a few locations,” the agency said in a statement. 

Next up, teams will complete post-storm recovery operations, which will include further inspections and retests of the flight termination system before a more specific launch date can be set. The new November launch window, NASA said, will also give Kennedy employees time to address what their families and homes need post-storm. 

Artemis I is set to send instruments to lunar orbit to gather vital information for Artemis II, a crewed mission targeted for 2024 that will carry astronauts around the moon and hopefully pave the way for Artemis III in 2025. Astronauts on that high-stakes mission will, if all goes according to plan, put boots on the lunar ground, collect samples and study the water ice that’s been confirmed at the moon’s South Pole. 

The hurricane-related Artemis I rollback follows two other launch delays, the first due to an engine problem and the second because of a hydrogen leak.

Hurricane Ian has been downgraded to a post-tropical cyclone but is still bringing heavy rains and gusty winds to the Mid-Atlantic region and the New England coast.

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What You Get in McDonalds’ New Happy-Meal-Inspired Box for Adults

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What You Get in McDonalds’ New Happy-Meal-Inspired Box for Adults

You’ve pulled up to McDonald’s as a full-on adult. You absolutely do not need a toy with your meal, right? Joking. Of course you do.

The fast-food chain will soon sell boxed meals geared toward adults, and each one has a cool, odd-looking figurine inside. 

The meal has an odd name — the Cactus Plant Flea Market Box — that’s based on the fashion brand collaborating with McDonald’s on this promotion. 

According to McDonald’s, the box is inspired by the memory of enjoying a Happy Meal as a kid. The outside of the box is multicolored and features the chain’s familiar golden arches. 

The first day you can get a Cactus Plant Flea Market Box will be Monday, Oct. 3. Pricing is set by individual restaurants and may vary, according to McDonald’s. It’ll be available in the drive-thru, in-restaurant, by delivery or on the McDonald’s app, while supplies last.

You can choose between a Big Mac or 10-piece Chicken McNuggets. It will also come with fries and a drink.

Now about those toys. The boxes will pack in one of four figurines. Three of the four appear to be artsy takes on the classic McDonald’s characters Grimace, Hamburglar and Birdie the Early Bird, while the fourth is a little yellow guy sporting a McDonald’s shirt called Cactus Buddy.

In other McD news, Halloween buckets could be returning to the chain this fall. So leave some room in your stomach for a return trip.

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Why companies like iHeartMedia, NBCU rely on homegrown IP to build metaverse engagements

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Why companies like iHeartMedia, NBCU rely on homegrown IP to build metaverse engagements

To avoid potential blowback from a skeptical audience, retailers as well as media and entertainment companies are learning to invest in their homegrown intellectual properties while building virtual brand activations inside Roblox or Fortnite.

Take, for instance, when they get it wrong.

Earlier this week, Walmart launched its own Roblox world — called Walmart Land — and was roundly mocked for it across social media given the announcement’s disjointed brand message and apparent lack of life. In one viral tweet, a Twitter user described a clip of Walmart CMO William White introducing the Roblox space as “one of the saddest videos ever created.”

This video of Walmart’s chief marketing officer on a stage in Roblox talking about its new “Walmart Land” experience is one of the saddest videos ever created. pic.twitter.com/HtIIToShKs

— Zack Zwiezen (@ZwiezenZ) September 26, 2022

To some extent, this sort of criticism is to be expected during the early days of the metaverse.

“Walmart is an iconic brand; when you see them coming into a platform like Roblox, people are going to be 10 times more critical of what is being launched,” said Yonatan Raz-Fridman, CEO of the Roblox developer studio Supersocial.

But Walmart’s size is not its only disadvantage as it dips its toes into Roblox. Although Walmart has a widely recognizable brand, it owns few intellectual properties that users are actually interested in experiencing virtually — a shortcoming reflected by the somewhat cavernous emptiness of Roblox’s Walmart Land.

Provided by NBCUniversal

The success of other recent brand activations is evidence that media and entertainment brands are better equipped to build metaverse spaces that can dodge online skepticism, thanks to their wealth of owned IP.

“They are having to reinvent themselves, to a certain degree, but that is in their DNA,” said Jesse Streb, global svp of technology and engineering at the agency DEPT. “So they have a unique advantage over, say, some kludgy company that sells lumber, or a construction company.”

For example, iHeartMedia’s Roblox and Fortnite spaces were inspired by the mass media corporation’s wealth of popular real-life events, such as the Jingle Ball Tour and iHeartRadio Music Festival, with virtual versions of musicians like Charlie Puth performing pre-recorded concerts that allow real-time audience interaction.

“There’s a strong brand association with the IP, down to a station level — you’re in the New York area, you probably know Z100,” said iHeartMedia evp of business development and partnerships Jess Jerrick. “The same is true for the event IP, or the IP that we now have in the podcasting space, and of course our radio broadcast talent. So there’s no shortage of really strong IP we can bring into these spaces.”

Translating real-life properties into the metaverse is also an enticing prospect for brands that view metaverse platforms as an experimental marketing channel, allowing them to bring tried-and-true IP into their virtual activations instead of designing them from the ground level. This was part of the strategy behind the recent Tonight Show activation in Fortnite Creative, which was designed in collaboration between NBCUniversal and Samsung. “We’re looking at it holistically — how do we find fans in new ways, and use IP that fans love in new ways?” said NBCU president of advertising and client partnerships Mark Markshall.

Since opening on Sept. 14, iHeartLand has already enticed over 1.5 million Roblox users to visit. The company aims to retain that attention with a schedule of virtual programming featuring popular musicians and personalities.

“At our core, we are essentially an influencer network; our broadcast talent are some of the most connected, most engaging influencers at work in media today,” said Conal Byrne, CEO of iHeart Digital Audio Group. “That gives us this sort of superpower, to be able to go into new-ish platforms, like Roblox or Fortnite, because we talk to our listeners through those influencers.”

https://digiday.com/?p=468395

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