Netflix claimed on Monday its just “experimenting” with ads that run both before and after every episode and video. The company claims its a test but if the data is good the company will likely roll this out to all users in the coming months.
For now, the company is copying the HBO model of running teasers for its own original programming. Netflix swears up and down that it will never run third party ads and instead just pitch its shows like Orange Is the New Black and House of Cards, but if the money’s right it wouldn’t be out of this world for Netflix to go down that path.
Interruption ads, especially as users binge-watch show after show, are very lucrative. When combined with a cable-like monthly fee, which Netflix already charges, the numbers start getting close to what cable companies make presently. They’ve long been chasing this number but have thus far not found a model to get there.
In addition to running interruption ads Netflix has the ability to deliver much more targeted ads, which command higher rates, than a standard cable company. Netflix, in addition to having a detailed history of what you watch, also knows your location, demographic and browsing history. Its data is unparalleled meaning, combined with interruption ads, it would command the highest rates possible for video advertising.
“We are running a test to show some of our original programming,” a Netflix spokesperson told reporters. “As with any Netflix product test, this may never come to all our members.”
Thus far feedback on Twitter has been negative, with numerous tweets complaining about the ads
“Internet TV is divorced of the need of advertising revenue because we can develop direct relationships with the consumer,” Netflix chief product officer Neil Hunt told reporters last year. Marketers should “find a different place to advertise,” he added.
Make no mistake, if the data is good, meaning the subscribers tolerate some ads, you’ll start seeing them on Netflix more often.
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