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.
- Though it would have taken long and been costly, developing an ad-supported tier would mean keeping money circulating in-house rather than negotiating a deal with an outside technology company like Microsoft.
- Word that Netflix is already questioning its advertising decisions doesn’t help the common criticism that the company is too quick to make snap decisions, be it canceling popular shows or abandoning initiatives shortly after launch.
- It also threatens to damage the company’s relationship with Microsoft, which may not be eager to renew a deal with a nervous partner, leaving Netflix out in the cold if it can’t develop its own ad tech in time.
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.