Netflix Builds In-House Ad Server To Take On Google, Amazon

Date: May 16, 2024

Netflix, the online streaming service giant, has finally decided to part ways with Microsoft and create its in-house ad server to expand capabilities.

Netflix has revamped its revenue generation strategies multiple times over the years to improve its bottom line without compromising user experience. Last year, the online streaming service company introduced an ad-supported plan, marking its official entry into the ad business. To support the Ads and quickly launch its Ad-supported plan, Netflix partnered with Microsoft to rely on their tech.

However, in recent news, Netflix announced plans to launch its in-house ad server. The company has significantly pivoted to a new ad revenue strategy that shakes up the industry. This move pits the tech giant against advertising giants like Google, Amazon, Hulu, and Comcast, who have led the industry for over 10 years.

Netflix wants to take full control of how Ads are displayed on its platform, from personalizing the ad experience for over 270 million subscribers to eliminating layers of commissions from the revenue generated. The company states that nearly 40 million users have opted for ad-supported tier

“Bringing our ad tech in-house will allow us to power the ads plan with the same level of excellence that’s made Netflix the leader in streaming technology today,” said Amy Reinhard, Netflix’s president of advertising. “We’re being incredibly strategic about how we present ads because we want our members to have a phenomenal experience. We conduct deep consumer research to make sure we stay ahead of the competition, bringing opportunities that are better for members and better for brands,” she added.

With its in-house server, Netflix can gain complete control over the duration of Ads, create multiple varieties that suit its platform’s consumer behavior patterns, and build a new ecosystem of advertising creativity. According to the Financial Times, Netflix is considering experimenting with Episodic ads that will take a longer, unique storytelling approach instead of showcasing repetitive and stereotypical content. 

The tech giant plans to improve its buying capabilities by partnering with The Trade Desk, Google’s Display & Video 360, and Magnite. These strategic moves combined will attract more marketers to the platform, essentially improving both topline in ad revenues and bottom-line through reduced payment layers.