Showvertising: Netflix’ New Stream of On-Demand Advertising

Ofir Yahav
3 min readJun 14, 2020

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When streaming wars intensify and digital ads are not an option, it is Netflix’ job to find new revenue streams

I know I am biased. I worked in advertising for the majority of my career and I think it is going to disappear in a few years from now. Based on this notion, I decided to dedicate my future to finding better engaging formats by founding Prandz — a platform transforming brands into publishers by connecting them with high-quality and authentic content.

Along with my philosophy major and professional experience in data analytics, I notice two counter trends in advertising that are here to stay. First, the inclination of consumers to avoid advertising and develop “ad blindness”. Second, the intent of advertisers to find new disruptive formats that will outperform click-through-rates benchmarks.

A constant battlefield of attackers and defenders

In this battlefield, digital advertisers constantly equip themselves with new weapons: Retargeting, in-stream ads, native ads, influencer marketing and content marketing with a key purpose to improve click-rates. They declare success when they manage to shift from the 0.06% benchmark to 0.1%.

Facing advertisers, consumers defend themselves by using ad-blocks and becoming immune to click-bates. Even if they engage with an ad, this will not be translated to a purchase in the short or long-term. They will feel deceived and therefore hold a negative sentiment towards the brand that tried to trick them.

Streaming Wars and Netflix

Advertisers search for new formats that are not perceived as advertising, simply because advertising is not perceived positively by consumers.

In the Over-the-top (OTT) segment there are two key ways to generate revenue from brands. The first is addressable TV — using the data gathered on users across multiple data-management-platforms in order to provide a more targeted ad and offering. The other is to insert native advertising inside the TV series or movies, similar to what we see across TV Reality shows.

However, Netflix is unable to use the first solution without harming its audience. Netflix is positioned as an advertising-free service, and so are the newcomers Apple TV+ and Disney+. That leaves Netflix to lean towards native advertising.

But Netflix seems to have taken native advertising to its next stage by creating pseudo-documentary TV shows for celebrities and institutes including Kevin Hart, Taylor Swift, Lenox Hill and even having ESPN’s critically acclaimed “The Last Dance” show featuring Michael Jordan.

This type of TV shows are more than just native advertising like the one appearing on “Comedians in cars getting coffee” by Jerry Seinfeld because the advertisement is the show itself, and not a part of it.

Throughout the episodes, the series suggests a more authentic view on the brand and provides a glimpse also to the less appealing parts of it, what makes it altogether more relatable.

Let’s call it Showvertising

Facing intensifying streaming competition, there is a limit to how much can be charged from the end user. With other services like Apple TV+, Disney+ and HBO, pricing can rise up to a certain point before a massive churn begins.

From Netflix view, this type of content can create a new revenue stream. They can charge the brand for producing the series, instead of paying them for generating it, and promote it as authentic content to users.

Being presented as an inner view to the brand allows consumers to interact better and allow Netflix to insert a new kind of ads.

The questions whether this approach will not harm Netflix in the long-term still remains unanswered, as consumers now pay for an ad-free service and in the future those formats will be probably perceived as ads.

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Ofir Yahav

Founder of Prandz — an early-stage startup with a vision to transform brands into publishers.