Brands owe streaming audiences a different approach to ads

Advertisers should be fans of the content, says Luke Southern, CEO at DRUM, Omnicom Media Group’s content agency. As Netflix is working hard to do the right things for advertisers, Southern explains why brands owe it to AVOD audiences to think differently about advertising on streaming platforms.

Ads have come to Netflix for the first time this month in the UK and 11 other markets but they are not, at least initially, a silver bullet to audience attention and engagement.  

Unlike adjacent streaming platforms like Spotify that were built specifically around ads from the outset, Netflix’s ad-supported tier is a retrofit and therefore needs to be considered differently.

The ad solutions on Netflix will be limited at first and we’ve already heard plenty of grumbling in the industry press in the run up to launch over the limited segmentation offer and high CPMs, but there is at least the promise of something more sophisticated down the line.

“Mired in 20th century thinking”

The ways in which we consume content have changed significantly over the past decade, yet many broadcast and digital ad formats remain mired in 20th century thinking. 

This isn’t just a criticism that can be levelled solely at Netflix. As AVOD grows, unskippable 30-second bumper and mid-roll ads are ubiquitous across all platforms. It’s time advertisers and audiences alike demand a rethink.

Certainly in the BVOD space, platforms are evolving to meet changing consumer needs, as we’ve seen with the evolution of ITV Player into ITVX and Channel 4’s decision to integrate its disparate services under a single brand. Looking beyond the platforms, the logical next step is in the evolution of the ad formats. 

I’d be willing to bet very few people who’ve sat through interminable pre-roll ad spirals on streaming platforms are likely to upgrade to a paid tier. Rather, they’re more likely to view the streamer less favourably.

Netflix lives or dies on the quality of its content – and if it’s to be a premium destination for brands, that needs to extend to its advertising offer. Rather than hitting audiences with volume, the platform needs to focus on value and get more creative on future partnerships.

Content remains king, but context is a close second

71% of consumers expect ads to be relevant to the content that they’re streaming. This should be a win-win situation for Netflix and advertisers alike once the ad platform matures to offer targeting based on viewing history. Moreover, brands need to align closely to the film or series they are paired with, each placement a mini partnership. Advertisers should thus be advocates – fans even – for the content.

So what might that look like?

Considering that Netflix’s ad-funded tier will limit the frequency of ads to well below existing linear channels, the bravest brands will need to think beyond standard advertising formats and think more broadly about how they integrate into the platform’s ecosystem.

Netflix’s hero show Stranger Things is a case-in-point for how brands are best-positioned to do this authentically. 

Product placement in a big budget show is anything but hasty. It’s a measured strategy that considers the nostalgic period setting to boost exposure and interest amongst audiences – whether or not they were alive in the ‘80s!

Eggo frozen waffles, integrated into the first two seasons of the show, are a good case in point. The brand became a major plot device and an authentic part of the overall narrative. As such the brand integration was received by audiences in a positive, rather than cynical way, resulting in a resurgence of interest in the convenience brand in the US and in the UK fan petitions to make the product available so they could experience the taste of Eleven’s go-to treat.

Brands don’t have to limit themselves to on-screen content integration either. Riffing on the importance of music in the show, this season Doritos gave fans the chance to attend an exclusive virtual concert set, fuelling fandom and supported by limited edition packaging with a 1980s throwback design.

It’s an example of how brands can launch activations that are additive to content on streaming platforms, which then tap into audience interests to build meaningful, authentic connections.

Netflix could look to set the standard for partnerships to ensure they uphold quality content for audiences. The streamer’s push into mobile gaming, branded merchandise through the Netflix online shop and fandom through the Tudum event suggests the best should be yet to come.

It’s a learning process though and not all brand activations have been so successful. The negative press around the amount of product placement in Michael Bay’s infamous ‘6 Underground’ didn’t reflect well on Netflix.

Begun the AVOD Wars have

Netflix and Amazon (via its Freevee brand) AVOD services have now arrived, with Disney+ to follow and potentially Apple too if rumours are to be believed. Add in more local services such as ITVX and ad-supported streaming certainly looks set to stay. 

Ultimately, clever brand activations will only go so far. Audiences (and consequently advertisers) will always follow the content and looking beyond scheduled sports and broadcast events, such as Love Island, ‘prime time’ could become a thing of the past. 

When it comes to content, Disney+ is undoubtedly the powerhouse, from Disney Classics to Star Wars, Marvel and Pixar, it is sitting on an embarrassment of riches for brands – and a highly invested audience. This puts Netflix on the backfoot as it enters the ad space. Staple series such as Ozark and Stranger Things are coming to an end and the platform’s reliance on external production houses puts another hurdle in the way for product placement deals.

However, this doesn’t mean the House of Mouse is necessarily going to clean up when it does launch an AVOD service. Netflix is working hard to do the right thing for advertisers, it has even opened the gates to its walled garden to allow BARB (Broadcasters' Audience Research Board) to provide transparency on viewing habits, rather than forcing brands to rely on its own opaque measurement.

As brands and agencies become better able to make informed decisions on which platforms they focus their energies and spend, there will be renewed pressure both on IP and on ad formats to engage and retain audiences.

Yes, Netflix and its competitors still have much work to do in maturing their advertising offers, but competition drives innovation. As such, we can expect bold new forms of brand storytelling to evolve as AVOD gathers momentum – and we are still only at the starting gates.