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As Advertising Arrives, Measurement Not Far Behind

Michael Hedges October 18, 2022 Follow on Twitter

Game changer is the most overworked term in the digital era. Every digital anything must be one, at least once, lest the risk of becoming a loser, the toughest epithet to shake. In good times, consumers embrace game changers. The masters of high finance ring the big bell for game changers, which are easier to explain than pork bellies. Games changers, however, are in the business of being game changers. Some have succeeded wildly. Digital media has been the pride of free-market economics; no rules, no taxes.

oh, the gamesVideo streaming service Netflix bolted the status quo again. Having made its name with blockbuster films and series available by subscription it has embraced advertising to supplement revenue streams, a move announced earlier this year. A reduced price “basic with ads” tier will be available from November 3rd in Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, the UK and the US. Potential customers in Spain will get their chance a week later. Downloading will not be allowed. Due to rights restrictions, certain movies and shows will not be available through the “basic with ads” tier. Children’s programming will not carry ads.

The new pricing feature is less about generating ad revenue and more about stemming this years’ tepid subscription numbers. If anything, it is possible that investors will care less about the rise and fall of subscriptions and more on over all profitability and, of course, those new revenue streams. Embracing the ad model could "brings in a new tier of users that potentially wouldn't have even subscribed before,” said media consultancy Qvest executive Jon Christian to Yahoo/Finance (October 18). With Netflix compiling a plethora of data from subscribers already, “I think there could be a lot of revenue in this game.” Other analysts believe Netflix could earn more ad revenue in Western Europe than North America.

Of course, other streaming video providers already offer a reduced price with ads bargain. It’s just that Hulu (Walt Disney Company), HBO Max (Warner Bros Discovery) and others did not get the massive press attention. The Disney+ ad plan will come into effect in December. But, compared with most others, the special Netflix offer is a bit of a bargain.

To make all these ads compatible with the standard practice of media buyers, audience estimates will be provided, also rather new to Netflix. Nielsen has been contracted to provide “digital audience measurement” next year in the US, likely reach figures for specific ads. For UK TV measurement agency Broadcast Audience Research Board (BARB) has been retained with data rolling out next month. Disney signed up with BARB last year.

There has been no similar announcement from Médiamétrie (France), Auditel (Italy). EGM (Spain) or anybody in Germany. Most already measure and report a channel’s total reach. Netflix also contracted with Integral Ad Science (IAS) and DoubleVerify to purge “invalid traffic.”

All media watchers note attaching to widely used measurement services is another first for Netflix, which has previously limited access to subscriber figures. By using Nielsen, BARB and Médiamétrie service yet another barrier has fallen; linear TV and streaming. To recall fabled management guru Tom Peters: What gets measured get done.

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