Netflix stated that it never intends to run traditional ads, though advertising industry experts aren’t so sure that will last much longer. Executives from YouTube, JPMorgan Chase and others were asked about Netflix remaining ad-free during a panel at IAB’s Digital Content NewFronts on Monday.
“Well, that’s not what their recruiters say,” said Tara Walpert Levy, YouTube and Google’s VP of Agency and Media Solutions. “They’re going to need growth. Eventually, they’re going to need more growth.”
According to JP Morgan Chase CMO Kristin Lemkau, consumers would be more considerate of ad-supported options if said options were clear and consumers understand the value exchange.
“The consumer wants choice and they want something that creates value for them,” Lemkau said. “To the extent that you’ve got this subscription version versus the non-subscription version, consumers will take that tradeoff.”
She also referenced the airing of the latest “Game of Thrones” episode, saying, “It wouldn’t have worked with ads.”
“That piece of content, that type of storytelling couldn’t have happened with ads. The army of the dead are at the wall, and we’re still fighting among the houses,” she said.
Other streaming services, such as Hulu, offer both ad-supported and ad-free options. Hulu offers its ad-supported service for $5.99 per month, while its ad-free service costs $11.99 per month.
Joshua Lowcock of media agency UM said while there has been a move towards removing ads, he believes it will go back the other direction. “We grew up in digital, believing we should inject ads everywhere at every moment we could,” Lowcock said. “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. If you look at their content costs … that’s where addressable advertising and new ad formats will come in.”