Netflix
is Crushing Idiotic TV Advertising
And how can we thank them? By successfully rejecting the
broadcast model, the company is dragging the traditional broadcasters with
them, because consumers will pay for a quality product.
I've heard it said that TV ads are the penalty you pay for
watching cheap and endless crap for free. Network television is effectively a
tax on people who can't afford something better - they have to watch this junk
and the endless ads as well if they want any sort of entertainment. Network TV
has become the shop window for every creepy and frightening ad for the perils
of aging and dysfunction, the threat of every newly imagined and cleverly named
disease, combined with incessant reruns of shows we hated from their debut.
There's also the traditional flood of car and beer ads -- never mind that the
average age of a new car buyer is likely to be an aging boomer.
If you've begun to painfully realize that the aggregate number
of ads, as well as time consumed, in any 30-minute slot of prime-time
television seems to grow every few months, join the club. Likewise, the bulk of
cable programming is no better than the rubbish the big broadcast guys promote
except that - as hard as this is to accomplish - the ads are even worse, more
crudely made, and dumbed down as well. But at least they provide regular
employment for broken down old jocks flogging Medicare supplements and hearing
aids while otherwise unemployable or shameless actors pitch reverse mortgages
and end-of-life term insurance.
This is precisely what "broadcasting" was always
intended to be: a tool to reach the masses via one-size-fits-all, lowest
common denominator offerings with the least objectionable material, so that you
don't change the channel. And all of it delivered through a framework to
support the ads and advertisers that paid the bills. And the whole thing worked
pretty well for all concerned except the viewers. None of us was really a loyal
or grateful customer - we just didn't have a better alternative.
When cable came along, it promised massive amounts of
programming choices, but there was only one distributor-- the dreaded cable
company, selected by local government. This is why cable was always
a grudge buy. There was no competition, you paid for a bunch of junk
you didn't want, and the cable company owned the local politicians and
rate-setting authorities as well. Sweet deal, but not for us.
But now, if you're willing and able to pay for the privilege, we
have streaming solutions and a growing flow of podcasts (and a few well-done
vodcasts) that - with the exception of Peacock, which seems like a glorified
invitation to a digital root canal - represent a new attempt at narrowcasting.
Smaller, more affluent, self-selecting and better identified audiences composed
of folks who are actually anxious and interested in seeing the offered material
and, of course, also willing to pay for it.
The entire initial premise of Netflix was that by trading your
privacy and viewing preferences and choices for automated personalization you
could have the system select and deliver higher-quality, more tailored, and
more entertaining suggestions, recommendations, and content for you. The
content was as good as anything else out there, and the discovery element was
real and serious. But what has become more and more apparent is that millions
of us were looking for and willing to pay for ad-free and uninterrupted
entertainment.
One of the tactical errors that some of the erstwhile and
flailing Netflix competitors have made is to offer a basic, less expensive
service with traditional ads along with ad-free access at an upcharge, which
seems to me to simply reinforce the depressing message and reality that these
days only paupers, morons and cheapskates watch ad-riven network programming.
If these competitive vendors had the courage of their convictions and believed
in their own offerings, they'd go with a single price structure. Thinking that
you can buy eyeballs and subscribers with bait-and-switch expiring offers or
deep, short-term discounts ("Get 2 issues of XXX magazine for $2 and then
we'll charge you $50 for the next 6 months.") hasn't worked for the few
survivors in the high-end magazine business. That pricing matrix is unlikely to
be a solid, long-term strategy for streamers either.
But it's going to be very interesting to see how long the new
ad-free models can be sustained and whether their managers can resist the
constant pressure from the market and their investors to further monetize their
captive viewer eyeballs. This is the constant debate we hear every day about
Twitter and others and it's a nasty disease that no industry can withstand for
too long.
But in the case of Netflix, the debate ignores a very critical
data distinction. Netflix can sell actionable targeting data about its users -
demographics, habits, tastes, interests, spending cycles -- to advertisers
without permitting them to show a single ad on Netflix itself, which would
jeopardize the customers' experiences.
You already know how this works. You look for something on
Amazon or search for anything on Google and - surprise of surprises - suddenly
half the other places you visit on the web are showing you ads relating to the
products and services you recently researched. Targeting your travels on the
internet is easy as pie. Amazon does this a lot better than Google because
Amazon, unlike Google, knows your purchase behavior as well so they won't waste
your time or try your patience showing you ads for stuff you bought two days
ago.
But Netflix never even has to let you know how the magic works.
And even if you ask, much like Facebook, they will likely tell you that all the
data they sell to third parties is anonymized so that while the ad targeters
"know" your interests and preferences, you should feel comfortable
that they don't really know who you are.
So, the modest good news is that you're unlikely to see ads on
Netflix any time soon and, if their competition has any smarts at all, they'll
be careful not to put their toes in that ugly pool of sludge as well.