Netflix hid ads for years, but now brands want in

Hyundai and Peloton want their products on Netflix. Netflix Hit a Subscriber Peak, Here's How It'll Grow

Netflix's membership count declined for the first time in over a decade, leading its stock to drop the most since 2004. WSJ's Joe Flint discusses three ways Netflix may grow and what the changes imply for rival streamers. Netflix's stock hasn't fallen this far since 2004.

Netflix hasn't announced much about their ad-supported offering. Advertisers are planning how to profit. Peloton Interactive Inc. PTON 8.92% expects the streaming behemoth will give precision targeting so it can reach the most probable workout equipment buyers. Hyundai Motor Co. HYMLY 0.00 percent wants its vehicles in Netflix series, but other advertisers aim to target younger viewers who have abandoned traditional TV.

Netflix revealed its second straight quarter of subscriber losses on Tuesday and indicated an ad-supported version will be ready in early 2023. It seeks to enhance subscriber growth and income.

Advertisers were barred out of most of the top streaming services for years while consumers abandoned conventional TV. HBO Max already has advertising, and Disney+ is about to do the same.

With 220 million users globally, Netflix is the largest prize for marketers, but it remains to be seen how many consumers would choose for the lower priced ad-supported tier. The business wants to renegotiate its programming arrangements with big studios to show ad-supported material, The Wall Street Journal reported last week.

Hyundai Motor America's chief marketing officer remarked, "We couldn't be here previously." "And we're going." Netflix said this week that Microsoft Corp. will help distribute video advertising, but marketers are keen to see how precisely they can target viewers.

Shiv Singh, CMO of online-lending company LendingTree Inc., praised Netflix's show- recommendation system. If the streaming service can do the same with advertisements, he sees huge potential.

Hyundai's Ioniq 5 electric SUV was featured on ABC's 'Black-ish' this year. Peloton's chief marketing officer says Netflix personalises effectively. Several advertisers are interested in signing multimillion-dollar long-term deals with Netflix, according to a big ad buyer. Quibi, Hollywood tycoon Jeffrey Katzenberg's now-defunct streaming service, negotiated $150 million in ad deals with blue-chip brands before its 2020 launch.

Marcel Marcondes, global CMO of Anheuser-Busch InBev SA, wants Netflix to redefine advertising. Netflix aims to provide an ad-supported service. Netflix Co-CEO Ted Sarandos stated commercials will be "more integrated and less interruptive" than traditional TV ads at the Cannes Lions conference last month.

Mr. Marcondes stated if they use the old paradigm, it will be the worst failure ever. Peloton's Ms. Treseder wants Netflix to collaborate directly with businesses on arrangements that might involve showcasing particular items in its series. “That's what will make marketers pay a major amount of their money, since you'll get a deeper ROI and cultural relevance,” she added.

Ms. Zepeda said Hyundai works closely with media firms like Disney to build commercial agreements that go beyond buying ad time and space. She said she typically searches for partnerships that allow her to engage with actors and showrunners to make advertising for specific programmes or have the company's cars appear on TV.

The Ioniq 5, an electric SUV, was featured in ABC's "Black-ish" this year. Anthony Anderson, who portrays an ad executive, worked on a fake Super Bowl ad for the SUV.

Ad experts claim it's more effective to advertise a product after viewers see it in a show. When a product plug airs alongside conventional advertising for the same brand, consumers are more likely to remember the brand.

Netflix has been ad-free since its beginning, but some firms have had their products or trademarks inserted into popular Netflix series, a source familiar with the practise said.

Coca-Cola Co. cross-promoted with "Stranger Things" in 2019, with New Coke appearing in numerous episodes of the 1980s-set programme. Coke and Coke Zero Sugar cans featured the "Stranger Things" logo. Coke paid to sell cans and bottles with the show's logo, but not to have New Coke appear.

Product placement has been part of the TV business since the beginning, but it grew as a means to avoid commercial-skipping gadgets.

Amazon.com Inc. introduced a pilot experiment for a new ad format this year that employs technology to digitally insert brands or items into TV episodes or movie sequences. Comcast Corp.'s NBCUniversal will provide a similar ad solution for Peacock.