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Netflix chooses Microsoft to manage advertising on its platform - Business

Netflix chooses Microsoft to manage advertising on its platform – Business

Microsoft announced on Wednesday that it will manage the technology for selling advertising space on Netflix, the streaming giant which wants to offer cheaper subscriptions but with advertising.

Netflix announced the move in April, after a disappointing first quarter in which it lost subscribers for the first time in a decade, and after years of resisting the very idea of ​​running ads. “Clearly it works for Hulu,” Netflix boss Reed Hastings remarked, referring to a competing service, during a conference call with analysts. “If you want the ad-free option, it will always be possible. If you prefer to pay less and are tolerant of ads, there will be an offer for you too,” he added.

This subscription will be added to the three options already available (“Essential”, “Standard” and “Premium”), the cheapest being ten dollars per month in the United States.

Microsoft will be responsible for designing and managing the platform for advertisers wishing to serve ads to Netflix users. “Microsoft has the proven ability to meet all of our advertising needs by building a new ad-based subscription offering with us,” Netflix chief operating officer Greg Peters said in Wednesday’s statement.

Data Privacy

According to the American specialized press, Netflix had considered other partners, such as Google, the world leader in advertising, and Comcast, an internet provider which owns Peacock, the NBCUniversal platform. Microsoft has the advantage of not having competing streaming services, unlike the three companies that rake in around two-thirds of digital ad budgets in the US, Google, Meta and Amazon.

The Redmond group (north-west) “places itself in fourth position” on this market in the United States, notes analyst Ross Benes of eMarketer for AFP. “He represents fewer conflicts of interest for Netflix than other companies and has established relationships with a wide range of advertisers.” “This deal gives it something its advertising business has been missing – quality inventory in video streaming, with strong growth potential,” he added.

Netflix believes that Microsoft will “allow it to innovate in a flexible way, both on the technology side and in sales techniques”, and “provide it with strong protections for subscriber privacy”, said Greg Peters. . Introducing advertising means exposing yourself to the questions that have been debated for years around the personal data of consumers, collected on a large scale to target them with personalized, more lucrative ads.

Bing style ads

“We are at the very beginning, but our long-term objective is clear: more choice for consumers and a premium tool for brands, better than in linear television”, detailed the director. Ross Benes expressed his doubts on this point, judging it “curious” that Netflix preferred not to design and manage its advertising platform itself. “One of their greatest strengths is their user experience,” he says. “Given the ad formats found on Microsoft products, such as Bing and LinkedIn, this partnership indicates that ads on Netflix will not set a new standard in the burgeoning streaming industry, but will instead mimic the usual formats, For the best or for the worst”.

After years of conquering users at high speed, Netflix lost 200,000 subscribers worldwide in the first quarter compared to the end of 2021, news that had its stock plunged 25% at the time. The Californian group reacted by announcing the arrival of advertising on the service, which should help it finance the investments necessary to maintain its leading position in the industry that it has launched. He had also indicated that he was going to tighten the screw on the side of the sharing of identifiers and passwords, which allow many people not to pay to access the content of the platform.

Netflix announced the move in April, after a disappointing first quarter in which it lost subscribers for the first time in a decade, and after years of resisting the very idea of ​​running ads. “Clearly it works for Hulu,” Netflix boss Reed Hastings remarked, referring to a competing service, during a conference call with analysts. “If you want the option without ads, it will always be possible. If you prefer to pay less and are tolerant of ads, there will be an offer for you too”, he added. This subscription will be added to the three options already available (“Essential”, “Standard” and “Premium”), the cheapest being ten dollars per month in the United States. Microsoft will be responsible for designing and managing the platform for advertisers wishing to serve advertisements attention of Netflix users. “Microsoft has the proven ability to meet all of our advertising needs by building a new ad-based subscription offering with us,” Netflix COO Greg Peters said in Wednesday’s statement. American specialized press, Netflix had considered other partners, such as Google, the world leader in advertising, and Comcast, an internet provider which owns Peacock, the NBCUniversal platform. Microsoft has the advantage of not having competing streaming services, unlike the three companies that collect around two-thirds of digital advertising budgets in the United States, Google, Meta and Amazon. ranks fourth” in this market in the United States, notes analyst Ross Benes of eMarketer for AFP. “He represents fewer conflicts of interest for Netflix than other companies and has established relationships with a wide range of advertisers.” “This contract gives it something that its advertising business has been missing – quality inventory in video streaming, with strong growth potential,” he added. ‘innovate flexibly, both on the technology side and in sales techniques’, and it ‘provides strong protections for subscriber privacy,’ said Greg Peters. Introducing advertising means exposing yourself to the questions that have been debated for years around consumers’ personal data, harvested on a large scale to target them with personalized, more lucrative ads.”We are at the very beginning, but our goal to long term is clear: more choice for consumers and a premium tool for brands, better than in linear television”, detailed the director. Ross Benes expressed his doubts on this point, judging it “curious” that Netflix preferred not to design and manage its advertising platform itself. “One of their greatest strengths is their user experience,” he says. “Given the ad formats found on Microsoft products, such as Bing and LinkedIn, this partnership indicates that ads on Netflix will not set a new standard in the burgeoning streaming industry, but will instead mimic the usual formats, for better or for worse.” After years of conquering users at high speed, Netflix lost 200,000 subscribers worldwide in the first quarter compared to the end of 2021, news that had sent its share price down 25% on the market. moment. The Californian group reacted by announcing the arrival of advertising on the service, which should help it finance the investments necessary to maintain its leading position in the industry that it has launched. He had also indicated that he was going to tighten the screw on the side of the sharing of identifiers and passwords, which allow many people not to pay to access the content of the platform.

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