Netflix aims to strengthen its advertising business and has announced that it will launch its own ad tech platform by the end of 2025. This platform will provide advertisers with new ways to offer their services and measure the impact of their campaigns.

The technology company has organized this Wednesday the second presentation of its Upfront event for advertisers. It suggests that advertisers who choose Netflix to offer their services can "reach the most engaged audience in the world," which currently reaches 270 million subscribers.

Netflix has a plan that displays advertising, which it implemented in 2022. In Spain, it is available for €5.49 per month and, in addition to embedding advertising during playback, it suppresses some of the most watched titles in its catalog. However, it plays them in Full HD quality and supports two devices.

This standard subscription model with ads now registers 40 million monthly active users worldwide, compared to five million a year ago, as explained by Amy Reinhard, president of Netflix Advertising, stressing that more than 40% of users in countries where the plan with advertising is present are subscribed precisely to this mode, which introduces ads both at the beginning and during the playback of series and movies.

Netflix bet on marketing 

With all this, Netflix has announced the launch of the aforementioned internal advertising technology platform, which will arrive by the end of 2025 and will give advertisers "new ways to buy, new knowledge, and ways to measure the impact" of their campaigns. In this way, Netflix will be able to create targeted and personalized ad experiences, as TechCrunch is nuanced.

"Bringing our ad technology in-house will allow us to drive the ad plan with the same level of excellence that has made Netflix the leader in streaming technology today," the executive said.

Reinhard also emphasized that this development comes after "in-depth consumer research and is designed to make Netflix even better for customers." "We are being incredibly strategic about how we present ads because we want our members to have a phenomenal experience," Reinhard emphasized.

Similarly, he has announced that this summer, Netflix will expand its buying capabilities to include The Trade Desk, Google's Display & Video 360 and Magnite, which will join Microsoft as the leading programmatic partners for advertisers.

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Amazon's advertising business is gaining ground on its other technology rivals, Google and Meta, and has been the fastest growing over the past three years. 

In 2022, this segment reached an annual rate of almost $40 billion, ten times more than five years ago. In fact, in the economic balance of the last tranche of 2022, the chapter on these advertising services stands out in particular. 

The results published by Amazon show that during the fourth quarter, it generated almost 11.6 billion dollars, 19% more than the 9.7 billion dollars recorded a year earlier. The figure is also a considerable improvement on previous months.

While Amazon's advertising unit still makes up a small fraction of the $149.2 billion in revenue that the Jeff Bezos-founded company posted in the fourth quarter of 2022, it represents a fast-growing area that analysts believe could be a "pivotal player" in the digital advertising market and one in which Retail Media plays a key role. 

According to Insider Intelligence's forecast, Amazon accounts for less U.S. advertising share than Google and Meta; however, while the duopoly's share is declining, Amazon's is increasing. Specifically, Amazon will see $33.96 billion in U.S. ad spending this year.

Amazon’s plan to conquer all things digital

Amazon continues its plan to dominate the digital landscape. To do so, it wants to lead the three fundamental pillars: media, advertising, and e-commerce. 

And more is needed for the company founded by Jeff Bezos to lead e-commerce alone. "They are moving into physical retail, which is still 85% of retail sales today. Amazon Fresh is the big ambition there because this is where the big national consumer brands will be bought," notes analyst Andrew Lipsman.

According to data from Insider Intelligence, Amazon's e-commerce channel advertising revenues, which are included in Retail Media spending, will approach 30 billion dollars this year, representing 76.2% of all e-commerce channel advertising spending in the United States.

According to the aforementioned media, Meta will account for 75% of total advertising spending on social networks and 14.5% of total media advertising spending in the U.S. this year. But, an advertising recession and Apple's privacy changes caused the Facebook and Instagram parent's U.S. ad revenue to contract by 1.1% last year, and this year's revenue will grow by only 2.7%.

Google, meanwhile, has shifted to media through YouTube, which currently accounts for just 2.1% of total U.S. media ad spending, but will grow by double digits in 2024 and 2025. "Google built the first truly revolutionary digital ad machine," declares Lipsman, who also stresses that Meta is "a real performance ad machine."

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Instagram is introducing two new marketing tools to offer businesses new ways to add advertising to the social network. These tools work via reminder ads and by adding ads in search results.

The goal will be for brands to be able to remind users of future events or launches.

The first point is that ads will appear in search results for people actively searching for businesses, products, and content of all kinds. Thus, they will appear in users' feeds before any other content.

Instagram reminders ads 

Instagram is partnering with brands like Starz to test a new ad format that makes it easier for businesses to advertise, remind and notify people about upcoming events or launches they might be interested in.

Reminder ads, which are launched to all advertisers as an option in the feed, help advertisers build awareness, anticipation, and consideration for upcoming moments. People can opt-in for convenient reminders and receive three Instagram notifications a day before, 15 minutes before, and at the time of the event.

Search result ads 

The second marketing tool announced by Instagram will be a functionality they are starting to test, which aims at adding ads in search results to reach people actively searching for businesses, products, and content.

The ads will appear in people's feeds when they tap on a post in search results. So they plan to launch this location globally in the coming months.

The launch of this new ‘ad results’ functionality has been greeted with a lukewarm welcome, as many users believe this could be detrimental to their user experience. 

For some experts, while the search result ads seem like they might be making the user experience worse, the second new ad type, called “reminder ads,” is mostly unintrusive and won’t change much about how ads are already used in a user’s feed. 

Essentially, ads will show up as usual while a user scrolls the app, but ads for events will have the option to send users reminders via push notifications as the event gets closer.

In practice, it’ll work like this: a user might see an ad for an upcoming event that now has a banner on it that says “remind me.” If selected, the user will get three push notifications: one a day before the event, the next 15 minutes before the event starts, and the final one as the event begins. 

Because reminder ads are opt-in, they shouldn’t change much about how a user experiences ads on the app currently unless their addition means that even more ads will be flooding feeds.

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Amazon will reward you for knowing what ads you see on your mobile. The company's new ad verification program will pay $2 per month to users who can access recommended ads. Currently, the program is only available to Amazon Shopper Panel members in the UK and US. This is a rewards program that already allows users to turn in receipts from third-party purchases in exchange for perks.

Those with the Amazon Shopper Panel app will see an option to participate in the ad verification service, which informs users that it will "collect and use information about where and when you see Amazon ads, for example, the app or website where you saw the ad and the time of day you saw it."

Customers can earn up to $10 per month by performing more tasks. As Amazon notes on the service's download website, "participants can earn monthly rewards by sharing receipts for purchases made outside of amazon.com, completing short surveys, and enabling ad verification for ads seen on Amazon's advertising or third-party companies that advertise through Amazon Ads."

Amazon reward will require users to enable Amazon Ads

Users who allow ad verification for Amazon Ads can unsubscribe and delete their personal information. The company also assures that it "will not share the personal data it collects with anyone else, unless necessary for a transaction with a third party, such as a seller on Amazon's site, or to comply with the law."

With this service, Amazon aims to generate the most accurate advertising possible with users, as well as help brands, reach an audience that can bring them an economic benefit. However, this new measure of the company needs to be pioneering. Back in 2012, Google Screenwise offered Amazon gift cards to those willing to monitor their network traffic; years later, in 2016, Facebook also provided gift cards to 13-25-year-olds for installing a VPN that would allow the company to view web usage habits.

Amazon Ads: does it work? 

Amazon Advertising (formerly AMS or Amazon Marketing Services) is a service that works similarly to pay-per-click ads on Google: sellers only pay when shoppers click on ads (regardless of whether or not the item sells).

But the problem is that Amazon, as a marketplace, doesn’t behave similarly to Google - as a search engine - does. 

And the different search intent yield, in fact, different results. According to Ad Badger, the average cost per click (CPC) for Amazon PPC is $0.97. This is on par, if not less, than similar advertising on Google and other platforms, but the CTR is considerably lower. This means most of the people who click will not, and in the end, buy your product. 

All in all, the success you have on the platform will be vastly different from the returns your brand could get on other PPC ad systems. Usually a lot lower. And perhaps this is the reason why Amazon is pushing to get more reliable data from their mobile channel.

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