Netflix needs to entertain advertising — at least that’s the view on Madison Avenue.
As online video viewing explodes and linear TV- watching comes under pressure, marketers are making the case that the Internet streaming video giant should drop its aversion to ads and embrace brands.
While Netflix’s subscription, ad-free service is popular with consumers, it’s not a stretch to think it could go from hits like “Orange is the New Black” to, say, Oreo cookies. Indeed, snack food giant Mondolez is said to have pitched Netflix on the idea, sources said.
Netflix is sitting on a massive stash of consumer data that it can mine to help advertisers tailor their pitches. For years Netflix has been analyzing what people watch to suggest movies or TV shows and can apply that same formula for marketers.
“The opportunity is there for targeted buying,” one source said. “People will pay a premium for the consumers they really want. If you watch a lot of car shows you might be interested in car ads. ”
With Netflix sinking more money into original, HBO-like shows, advertisers are hoping it will become harder for the company to say no to the additional revenue stream.
Netflix could fetch around $20,000 for a 30-second spot, one agency source estimated. Another pegged the cost per thousand households at $20, or the low end of a broadcast network primetime rate.
“I would expect Netflix to be priced no differently than the full episode players on sites like TNT.com, or FX.com. Even Hulu could be a benchmark,” said Lesley Pinckney, vice president of digital and social media at agency Walton Isaacson.
Netflix, which reports third-quarter results on Oct. 15, has been spending big and could use the cash.
Last week, it signed comedian Adam Sandler to an exclusive four-movie deal, while it struck a pact with Weinstein Co. to stream the sequel to “Crouching Tiger, Hidden Dragon” the same day it hits the theaters.
I would expect Netflix to be priced no differently than the full episode players on sites like TNT.com, or FX.com. Even Hulu could be a benchmark.
- Lesley Pinckney, VP at agency Walton Isaacson
Netflix CEO Reed Hastings has been steadfast in his rejection of the much suggested pre-roll ad airing before shows. “It’s fundamental to that control orientation that we don’t cram advertisements down people’s throats,” he said during the last earnings call.
A new survey last week from RBC Capital Markets analyst Mark Mahaney revealed that 42 percent of respondents had watched a TV show or movie on Netflix in September, up five percent from February 2013.
The exclusive hit “Orange is the New Black” was cited as a big reason for getting Netflix, according to the survey.
Mahaney has a price target of $600 on Netflix shares, which closed Friday at $459.54.
Meanwhile, Netflix users are watching 92 minutes a day on average, according to The Diffusion Group.
Those figures might explain why it has been rumored in ad circles that Mondolez — which signed a deal with Google to put more dollars into digital video — has met with Netflix as well.
Netflix said any suggestion that it would accept advertising is “simply untrue.”
Mondolez didn’t respond to a request for comment.