Netflix chooses Microsoft as global ad partner as it plans new tier of service

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The bake-off to find Netflix’s first advertising partner is over, and Microsoft is the winner.

The tech giant will be Netflix’s global advertising business and technology partner, the streaming service announced on Wednesday.

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“Microsoft has the proven ability to support all of our advertising needs as we work together to create a new ad-supported offering. Most importantly, Microsoft has provided the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members,” the COO wrote. and Netflix Chief Product Officer Greg Peters in a blog post.

The deal with Microsoft will allow Netflix to quickly enter the advertising space, although Peters warned that it was still “newbie” for its ad-supported offering.

Netflix revealed plans to add a cheaper ad-supported offering in April, with co-CEO Reed Hastings saying at the time, “It’s pretty clear it works for Hulu, Disney does it, HBO does it. did. We have no doubt that it works,” adding that “enabling consumers who want a lower price and who are ad-tolerant to get what they want makes perfect sense.”

Hastings’ colleague, co-CEO Ted Sarandos, added at the publicity-focused Cannes Lions festival last month that “we’ve left out a big customer segment, which is people who say: ‘ Hey, Netflix is ​​too expensive for me and I don’t mind advertising.

Netflix’s decision came as a surprise to the industry, given its long-standing aversion to ads, and word quickly spread that it was looking to find a well-equipped partner to help launch it quickly. an ad-supported plan. To that end, Netflix apparently talked to everyone in the ad tech world, including Google, Comcast, The Trade Desk, and Roku. Microsoft, which acquired digital video advertising service Xandr from AT&T earlier this year, ultimately won.

Netflix’s advertising plans have also been the talk of the town this year, with many legacy competitors happy to gloat to marketers over the strategic move.

The streaming giant is said to be in talks with potential candidates to lead its fledgling advertising division, with Hastings suggesting in a recent memo that it could recruit staff over the next year and a half.

The ad-supported tier is almost certain to bring another change to how Netflix works: improved transparency around what consumers are watching. Media buyers and advertisers always want to have an idea of ​​how many people are seeing their ads and data on who those people are.

“In the advertising world…one of the requirements is some level of transparency and third-party auditing and reporting. Advertisers want proof,” said Connected TV Advertising Market CEO Jim Lombard. TetraTV. THR in April.

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