What Ads on Netflix Could Mean for Healthcare Marketers

Last month, Netflix announced that it was exploring options to implement ad-supported plans. The move would be revolutionary for the streaming giant and provide healthcare marketers with significant advertising opportunities to appeal to hard-to-reach consumers in a fragmented media environment.

MM+M spoke with Askan Karbasfrooshan, CEO of WatchMojo, about what the move to ad-supported models will mean for streaming services, how it will affect the future of content and what marketers can do to get the most out of it. This interview has been lightly edited for length and clarity.

MM+M: What do you think of Netflix’s public consideration for an ad-supported model? What does this mean for the future of streaming services?

Karbasfrooshan: The whole point of advertising is that it disrupts the viewer’s experience, it’s not meant to be personalized. During the “golden age of streaming TV”, this did not align with Netflix’s positioning. But as industries and businesses move through life stages, realities change. So it’s a reflection not only of a maturing industry and business, but also of the fact that advertising is moving online even as people spend a lot of time in subscription environments.

This bottleneck represents a huge economic opportunity that Netflix could resist until now, but no more. I guess it will happen sooner since the company has tested with promotional or internal ads. Ultimately, the advertising medium in OTT [over-the-top] media, be it AVOD [advertising-based video on demand] or FAST [free ad-supported television]will be much bigger than SVOD [subscription video on demand].

Netflix can no longer resist, especially since ad-supported models will be needed for international markets, despite the fact that the average revenue per user in international markets will be lower than in the United States. The long-term impact is a faster acceleration of TV dollar change and a larger total addressable market.

What impact would the adoption of streaming at the advertising level mean for marketers, especially those in the healthcare industry?

This isn’t new: Hulu, Roku, Pluto, Tubi, and Paramount+ have offered ad-supported streaming for years. Healthcare is unique in that it requires a bit more oversight, disclaimers, and regulatory approvals. In that sense, I think that if the Web used to be a bit like the Wild Wild West, when it comes to health, the rules and regulations of television will be transferred to streaming.

However, ads on smaller niche sites, especially in text-based environments, will remain a bit more accessible. You’ll see those disclaimers you hear at the end of online health TV spots. Otherwise, big sponsors won’t spend as much of their budgets online.

What is the most overlooked current media trend that marketers should pay attention to?

This brand safety is in the eye of the beholder, to begin with. With the rise of the so-called creator economy, which is just a mix of influencers becoming more professional and “solopreneurs” using content for marketing, I think you’ll see a new layer of programming that could have a better return on investment.

If we hit a recession and Fortune 500 marketers’ ad spend declines, I think small and medium-sized businesses will step in and fill that void, but only as long as the ROI makes sense. Second, international audiences have always been a bit of an afterthought for US brands and publishers – but while revenue per user is lower, it adds a ton of reach. Given the rise of programmatic content, this could optimize total revenue.

Where do you see the state of content in the next two to three years? What does this look like and how should marketers adapt?

As far as form is concerned, video has replaced text and display. While social media has disrupted search a bit, you’ll see a dramatic acceleration in video advertising. This will largely be powered by this so-called UGC [user-generated content] 2.0, which is creator or influencer content that will be more polished and more in tune with the format, pace, length and style that audiences will expect to see.

When it comes to length, we’ll have a bit of a dumbbell freak. At one end, 15 years ago, grainy UGC videos gave way to longer cooking recipes, makeup tutorials and professionally produced DIY tips. Now these are getting even faster and sharper on TikTok and Instagram. We went from long content to three to 10 minute content to less than one minute content. This will only accelerate as users have a shorter attention span.

On the other hand, the rise of FAST also means that there is a need for long-form content mimicking content. Many established YouTube creators will begin to look to FAST for new distribution and monetization opportunities as the younger generation of creators embrace shorter content for new platforms like TikTok.

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