The news: It’s been less than six months since Netflix announced its much-discussed ad-supported tier, but the company is already mulling different directions for its advertising business.
According to Digiday, Netflix is looking into building or buying its own advertising technology after its two-year contract with ad tech partner Microsoft ends in 2024.
Rough beginnings: The historically ad-averse Netflix spun up an ad-supported tier in an incredibly short amount of time last year to appease investors upset about its first-ever subscriber loss. While the fast turnaround was impressive, a rushed launch led to some early bumps.
Working from behind: Netflix and Microsoft’s partnership was a perfect match, and Netflix has made it clear that advertising is a pillar of the company’s future. But if sudden events hadn’t sent Netflix down the advertising path, it would have been ideal for the company to develop its own ad stack.
Our take: If Netflix really does want to tough it out in the advertising world on its own, it has to act fast, either by beginning development on ad tech immediately or by looking to acquire an ad tech company it can build off of, as Microsoft did with Xandr—but a big acquisition may be unlikely in today’s high-interest environment.
This article originally appeared in Insider Intelligence's Marketing & Advertising Briefing—a daily recap of top stories reshaping the advertising industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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