No surprise, Netflix was a big topic of discussion today as IAB’s Digital Content NewFronts event kicked off in New York City — and a panel of advertising industry executives repeated an oft-heard prediction again today that will probably make most Netflix subscribers groan.
Despite the promise from its leadership that the service will remain ad-free, at least when it comes to traditional ads and commercials, Netflix is eventually going to have to succumb to the inevitable and run ads. That’s according to industry execs like Tara Walpert Levy, who leads agency and brand solutions for YouTube and Google.
She was on today’s panel, with participants at one point asked about Netflix’s desire to keep the service free from ads. “That’s not what their recruiters say,” Levy said, according to a CNBC report about today’s event. “They’re going to need growth. Eventually, they’re going to need more growth.”
JP Morgan Chase CMO Kristin Lemkau added during that same discussion that even she thinks consumers might go for at least an ad-supported Netflix option, it’s still a delicate balance to achieve. Exhibit A she pointed to for why there’s no one-size-fits-all answer to this question is Sunday night’s Game of Thrones episode, which depicted the brutal, nonstop and in-your-face desperate battle for Winterfell. That episode, she declared, would not have worked as well if it had been broken up by ads that interrupted the flow of the battle.
This is actually a perennial question when it comes to the future of Netflix — whether or not the service will ever introduce advertising into the user experience. As we reported back in the fall, Jeff Green (the CEO of online advertising marketplace The Trade Desk) said during an episode of Recode Media with Peter Kafka that he too thinks Netflix will have to embrace ads. Partly because of the fact that consumers are getting closer to the limit of how many subscriptions they’ll be willing and able to pay for.
And as that ceiling approaches, services will have to remember that many consumers are perfectly fine with the trade-off of accepting ads in order to keep their service free. Hulu, for example, offers a cheaper ad-supported tier for $5.99 per month, while its ad-free version costs $11.99 per month.
“We grew up in digital, believing we should inject ads everywhere at every moment we could,” Joshua Lowcock, of media agency UM, said during today’s panel discussion, according to CNBC. “And that’s why you’ve seen ad blockers and a move to ad-free environments. I think there will become a tipping point where ads come back. Netflix is ad-free now. I can’t imagine a world where Netflix will be ad-free forever.”