🌯 Will Microsoft Acquire Netflix?; Disney & TTD Link Up

AdMonsters Wrapper: The weekly ad tech news wrap up
This Week
July 19, 2022
Is Microsoft Looking to Scoop Up Netflix Next?
Disney and TTD Link Up
Retail Media: Publisher Friend or Foe?
Around The Water Cooler
Could the Netflix + Microsoft Ad Partnership Lead to More?
Are you as surprised as we are that Netflix selected Microsoft as their significant other to help them get their ad-supported business off the ground?

Well, it may not be as surprising if some of the rumors we're hearing about their union becoming an actual marriage turn out to be true. But first, let's revisit how we got here in the first place.

A couple of months ago, Netflix was shaking in their boots after a Q1 earnings call revealed the streamer wasn't hitting the same old subscriber numbers from long ago. This was followed by an earth-shattering announcement from Netflix co-CEO Reed Hastings that the company was finally open to considering a lower-tiered subscription offering supported by advertising. Given the billions they're investing in content every year, it's no shocker they finally had to give in.

That's when the vetting process for an advertising partner began. Netflix chatted with like-minded suitors far and wide, from NBCUniversal to Roku to Comcast plus more. Then,  after a heavy courtship in Cannes, it appeared that Google would be the front runner.

Instead, Netflix ended up choosing Microsft, and as their new "global advertising technology and sales partner," the old-school tech titan will provide the ad tech pipes for a privacy-safe advertising experience for Netflix subscribers. But wait, there's more...an analyst is predicting that it's all part of a bigger scheme in which Microsoft will acquire Netflix right after their Activision Blizzard deal wraps up.

It's also worth noting, that Netflix is chatting with various entertainment studios about including ads next to some of the biggest shows. This train has already left the station.
Why This Matters
What did Microsoft have that the others didn't? You guessed it, their own video business.

Though Microsoft's ad tech experience is nascent, unlike Comcast or Google, "Microsoft doesn’t have a video service of its own that competes with Netflix." Also, Microsoft's acquisition of Xandr last year is a plus. For a company hoping to have the plumbing in place to survive the death of the third-party cookie — Xandr-powered ad tech will make it easier for Netflix to enter the ad space in a privacy-compliant manner fairly quickly, even if it is just early days.

It also doesn't hurt that Microsoft's ad business has grown significantly in the past year. Microsoft brought home $8.7 billion in revenue from search and news advertising in the nine months ending March 31, up from $6.7 billion during the same period a year earlier.

Of all the other players, Microsoft certainly has the cash on hand to acquire Netflix. That's if Netflix is indeed planning an exit. For Microsoft, a Netflix acquisition would mean a huge lift for its streaming business by combining Xbox Game Pass + Netflix. Such a merger would provide all the more eyeballs to better serve ads to. 
Disney Links Up With The Trade Desk On Ad Deal
In other streaming ad tech news, Disney announced it's finally ready to begin serving ads on Disney+. And to make that happen, they've chosen The Trade Desk to target automated ads across Disney properties using data matched on the back end from Disney and TTD.

The data will come from Disney's Clean Room, where advertising partners can combine their data with Disney's data that's been matched with Unified ID 2.0.
Why This Matters
Disney+ and Netflix have long strayed away from ad-supported models. Isn't it ironic that they both met their matches around the same time?

Like Netflix, Disney+ is one of the most popular streaming services, and it is very telling that both sought ad tech partners that would help them become post-cookie ready. The Disney + TTD deal will also create a whole new layer of addressability for buyers — biddable inventory across Disney's ecosystem, all validated by Disney's proprietary Audience Graph. The Audience Graph consists of 100 million household IDs, 160 million connected TV IDs, and 190 million device IDs and real-time updates.

We expect more partnerships to emerge between major media companies and other big ad tech firms. Rita Ferro, Disney's president of advertising and sales for media and entertainment, has already hinted at similar deals.
Retail Media - the 'Third Wave of Digital Advertising'
There was a time when digital advertising was frowned upon within retail media. Overall, the idea of having ad tech drag down websites and lead to poor user experiences long-scared retailers from cashing in.

But boy, oh boy, how a major Pandemic and an increased online commerce craze have certainly changed the tide.

Amazon, Walmart, and Target combined drew in over $2.3 billion in ad spend from May - January, according to MediaRadar. By 2023, eMarketer predicts that retail media ad spend will hit $50 billion. And Boston Consulting Group says retail media will account for 25% of digital media ad spending by 2026.

Should publishers be shook that retail media is taking away ad dollars traditionally earmarked for them?
Why This Matters
What's the old adage again, "If you can't beat them join them?"

Retail media companies need to advertise to their customers both on-site and off-site, and that's where premium publishers come in, writes Media Trust's Gavin Dunaway.

"When retailers buy off property, they need high-quality inventory in well-lit spaces. To ensure brand safety—both their own and advertisers’—retailers are pursuing guaranteed direct deals with premium publishers as well as private marketplace arrangements."

And this growing opportunity isn't just for large-sized pubs; it's for niche pubs too. So let's do away with the us vs them mentality and figure out how everyone can partner up. AdMonsters PubForum Montreal Keynote, Sharon Harris, CMO, ASCENTIAL will be talking to pubs about the role they play in retail media's future. You should join us.
Around The Water Cooler
Other trending topics...
  • Facebook is no longer the wave: Advertisers and consumers have lost trust in the social media platform, so what's next? (Digital Content Next)
  • Surveillance Advertising: What's the right way to rein it in? (New America)
  • Unity’s merger with Ironsource: Scooping up an app monetization platform like Ironsource is a big deal for Unity, but let's not forget the game developer blowback Ironsource received for its malware installations (Yahoo Finance + NME)
Sweet Tweet
How Microsoft Won Over Netflix 
Netflix pitch summary: Netflix: how well can you help us monetize our ad breaks?

Microsoft sales rep: Mark my Word, we Excel in it. Just give us Access to it and we’ll show you all the PowerPoints.
Worth a Listen
All Advertising Is Not Performance Marketing
Joe Marchese, executive chairman of Human Ventures has a useful reminder that boiling all advertising down to performance marketing is a mistake and misunderstands the point of building brands.
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