Streaming Media Services Setting New Table for Advertisers

February 13, 2020

By Matthew Schwartz


In an episode of South Park, a Netflix sales rep answers the phone and says emphatically, “Netflix, you’re greenlit, whom am I speaking with?” South Park’s main protagonist, Eric Cartman, doesn’t bother to explain the premise of his show or its intended audience, but insists that it would be “great” for Netflix (which in real life has 158-plus million paid subscribers). “Would you like a pilot or just go straight to six episodes?” responds the rep. Without missing a beat, Eric replies: “We’d like to go right into six episodes, with a pick-up option after three.”

The sales rep answers: “Got it, can you start shooting next month?”

While played for laughs, the conversation is seemingly a pretty accurate reflection of the proliferating number of original shows now flooding streaming media services, with close to 400 original series (and counting) on Netflix alone. But Cartman’s pitch also raises serious questions about who’s going to help fund all that streaming content, distributed in ever-thinning slices?

Enter brand marketers who, amid the downward trajectory of traditional advertising, should view streaming media with enormous upside.

Indeed, 2020 may be the year media historians peg as the time streaming media services — initially touted as ad-free — flipped to an advertising model (more or less).


Scramble for Share

The latest catalyst for ad-supported streaming media? The announcement in early January that NBCUniversal’s Peacock streaming service will rely on advertising, rather than subscriptions, to generate revenue.

Peacock, which debuts April 15, joins a growing list of streaming services, including Amazon Prime, Apple TV, Disney+, Hulu, Sling TV, and the soon-to-launch HBO Max. The services offer a veritable smorgasbord of content, with various subscription tiers and consumers coughing up a few extra dollars for packages that do away with ads.

Netflix, which remains mostly ad-free, was on the ground floor of the market, of course. Starting in the early 2010s, subscription rates grew nearly exponentially, and a narrative quickly emerged that streaming media was the narrowcasting equivalent of nirvana — consumers binging on their favorite TV shows, commercial-free, to their hearts’ content.

However, with streaming media services continuing to pile up original programming — and the most recent entrants expecting to incur years of financial losses before they turn a profit — the subscription model seems unsustainable. The bet is a big one, considering how fickle people are when it comes to their media consumption, and certainly won’t sign up for every single plan.

Brand advertisers, who covet younger, cord-cutting consumers who are a significant part of the streaming audience, have the budgets to bankroll streaming content, most of which aspires to realism (and doesn’t come cheap).

With deep-pocketed competitors emerging, senior Netflix executives may be feeling a slight chill down their spines right about now regarding a subscription model. In its most recent earnings, the company beat the top and bottom lines for the fourth quarter, but gave “disappointing guidance” for the first quarter, according to CNBC, just as new streaming entrants like Peacock and HBO ready for launch. In a company letter, Netflix CEO Reed Hastings reiterated that the company has no plans to integrate advertising in its programming and is focused on “streaming and customer pleasure,” per CNBC.

Fair enough. But “streaming and customer pleasure” don’t necessarily mean that brand advertising and Netflix are incompatible.


New Ad Formats Abound

As nascent streaming services go global and the competition for eyeballs grows fierce, I wonder just how long the (relatively) ad-free dam at Netflix can hold. But marketers won’t wait till Netflix blinks. The most forward-thinking marketers need to craft new ad formats tailored to streaming media and find legitimate ways to wed the brand to the story.

Netflix doesn’t need a weatherman to know which way the wind blows. Amid the ongoing scramble for share, marketing executives said “Netflix was increasingly open to lending its name to outside projects, including joint marketing campaigns and products based on its shows,” according to the New York Times.

Case in point: The wildly popular Netflix show, Stranger Things. The series, an homage to the 1980s, doesn’t accept paid product placements but, rather, threads brands into storylines to create a strong sense of verisimilitude. Household name brands including Burger King, Coca-Cola, and Nike have gotten into the act.

But the opportunity in streaming media goes well beyond product placement on steroids.

Take the Baskin-Robbins’ Burbank, Calif., store, which saw a 150 percent jump in sales after the brand recreated Stranger Things’ fictional “Scoops Ahoy” ice cream shop, and served a special-edition flavor inspired by the show.

“We initially discussed just creating a flavor that consumers could experience, but as we continued to discuss the partnership we saw so much value in building out a fan-centric experience that was authentic to the show and unlike anything that's been done previously,” a Baskin Robbins spokesperson told CBS MoneyWatch.

It’s that type of thinking that needs to be de rigueur among marketers looking to monetize streaming media — and stay “relevant” in the eyes of consumers.

The ad opportunities for streaming media are only limited by marketers’ imagination. Within streaming media programming, brands will have to find ways to serve as plot devices, fuel character development and, as Baskin-Robbins amply demonstrates, craft unique experiences (online and/or offline) that play into the dynamics of various series.

As streaming media becomes the norm, there even may be cases in which a brand’s 30-second spot — whether a current ad or one of the nostalgic variety — makes sense within the context of the storyline and doesn’t feel forced. If it adds to the narrative exposition, viewers will pay close attention, as opposed to missing the spot entirely on other media channels.

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