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How Netflix is Changing Live Sports and Connected TV Ads
00:24:00
Netflix Advertising VP Nicolle Pangis breaks down how the streaming giant scaled to over 250 million global ad-supported subscribers in just over three years by migrating to an in-house ad tech stack and blending programmatic data precision with massive culture-defining content tentpoles.
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- [00:00]
A
A lot of these things, we think of them as different. But if you think of the principles of the early days of programmatic right, which is, you know, people thought we were crazy. And so 25, you know, years later, 20 something years later, what we're finding is that it's actually very relevant to move that thinking and that strategy into new channels, including traditional television and now CTV as it continues to grow. Because for a while CTV was gaining share but didn't really have ad supported eyeballs. Now obviously ad supported eyeballs are increasingly moving into ctv. So to me, it's just a natural evolution of, of sort of where to bring the, you know, the data intelligence layer into ctv.
- [00:42]
B
We all know TV has become fragmented and we all know the feeling of spending more time deciding what to watch than actually watching or worse, knowing exactly what you want to watch and still not being able to find it. Vizio OS was built to solve this problem. Viewers spend 30 plus minutes a day on Vizio's home screen searching, discovering and getting inspiration to guide their entertainment and shopping journey. For advertisers, whether you're promoting a new show, restaurant or car or product, this is the best and only place to capture attention before they dive into an ad free environment. And analysts project Vizio will become the number one TV operating system by 2027, positioning it as the front door of TV. If you want to connect with consumers at the moment of discovery and let Vizio turn attention and action, reach out to Vizio. Adsizio.com this week on Next in Media, I chatted with Nicole Pangas, VP of Netflix Advertising, North Americ, about her first 18 months on the job at one of the most intriguing companies in advertising. Nicole and I talked about Netflix's approach to selling brands on its growing scale versus more data driven targeting. Why the company's position is not unlike the old days of broadcast tv. Nicole and I also talked about Netflix's unique ad tech journey while helping take the temperature of the current upfront marketplace. Let's get started. Hi everybody. Welcome to Nexting Media. I'm Mike Shields and my guest this week is Nicole Pangas. She's the Vice president of Netflix Advertising for North America. Hey Nicole, thanks for being here.
- [01:52]
A
Hey, nice to see you.
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B
It's good to see you. You did the show back in the early days, so you were returning guest, but it's great to have you on, especially because you're at one of these really interesting jobs at a company that has been fast emerging as a big ad player. As everyone knows, you joined Netflix I think like late 2024 if I'm right. So give us talk about like the past 18 months. What has that been like, what have you guys been building? What did the business need?
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A
I was lucky enough to join on the two year anniversary of the Netflix ads business. So it was, it was growing Great, right? There was already great momentum. So I am very appreciative of the folks that were here from day one to the second year when I joined, because they put down a great foundation. We were still building the infrastructure to sort of what, match what everybody needed. Because when Netflix said that they were going to build an ad business, we had zero ad subscribers, remember. Right. So from the day of announcement to the tier anniversary, there was so much work that went into building the ads footprint and starting literally from scratch. All the things like literally from scratch. So I don't know, you know, I just think it's such a, an appreciation I have because doing that as a business of our size is, is just, it was incredible what I walked into in two years. So that being said, there was a lot of foundational work that we were still doing. We had announced that we were building our own ads platform at that time, but we weren't on it yet. So that was still getting built at the two year anniversary. And really the, the intent of that was to just be able to move faster. We were expanding our programmatic business, which we had announced in the upfront earlier that year, giving advertisers better planning tools, better measurement tools, all the things that a player like us would need. So a lot of foundational work was done, but we definitely had a lot more to do. So now that we've moved over to our ad server, which we did a year or so ago, now we're able to move much faster because we're building with our partners and for our partners, you know, within the Netflix ad suite, which has been a really exciting journey over the last year or so of the 18 months I've been here.
- [03:56]
B
All right, definitely want to come back to the ad platform stuff, but let's get into, you know, the numbers you guys have been talking about lately. The. A bit. A big majority of your new subscribers are ads. Like at the beginning you hadn't. Right. Like you said, you had. No, no, no, no ad supported subscribers. So it's really hard to sell something that until you get that base going. Tell me about the overall mix today between ad free and ad supporters ad supported subscribers in the U.S. yeah.
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A
So right now for every new subscriber, 60% are on the Ads Plan, which is a great, a great number, right? So more than, more than half. But in totality, the Ads Plan today has over 250 million global subscribers. So besides the fact that we have a great sign up rate to the ads business generally of, of net new ad subscribers to Netflix, the scale that we've brought again in three and a half years of a business is really quite incredible because as we know, a lot of the big global brands want footprints across the globe to be able to sort of amplify their message consistently with larger partners. And I, my, my sticky adage is fewer, more strategic partners are becoming more important, more important in advertising. And we're fast becoming one of those partners because of the scale that we've been able to drive in a short time. The other important stat is not all ad subscribers are created equal across platforms. In our case, 80% of the ad supported members are watching Netflix every week. So the repetition of subscribers is also important because you could be paying for a subscription, but not actually regularly using services. And in our case.
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B
Right. The habitual thing is really important. Right, for advertising.
- [05:36]
A
Very important. Exactly. So, so the combination of these two things, I think puts us in a really unique position to continue to grow, not just the ads business for Netflix, but in partnership with our clients who like the repetitive eyeballs, as we all know, is really important. When you're talking about advertising, you've kind
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B
of hinted at this a little bit, but there was it like in the beginning. I remember going to a beat retreat and people were talking about the Netflix ad business and it was like, yeah, wait, you know, someone says like, wake me up when they've got some real inventory. There's nothing there yet. It's a long time. It's, it's changed very quickly. Can you compete with the other big media companies at this point? Like, is what has changed in that, in that regard?
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A
Our scale has changed, our capabilities have changed. So my short answer is yes. Right. We are competing for ad dollars that we weren't competing for again three and a half years ago when we launched the business. And it was for a variety of reasons. The scale, as we talked about already, the global scale, which I think makes us unique relative to certain other CTV players that are more regional or, you know, more country specific, and also just capabilities that we've been able to build in a very short period of time, both from a, you know, the marriage of art and science, you know, the great content that we have in combination with being at our core a technology company. Right. Netflix is a, an entertainment company and we talk about ourselves as such. But what we are known for is really tremendous technology. Right. We know what the show you want to watch before you know you want to watch it. So that at the core is driven by technology and you know, AI is the word of the day, but Netflix was actually doing that many, many years ago. That is how recommendation works.
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B
That's what they're all about, right?
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A
Exactly. So obviously more that we have to do. My other sticky thing I say is like, you're never done building technology in ad tech, right? We've been doing it for decades now and we'll continue to do it because there's always more to build and more to do. But we are very competitive in the space and are doing a lot of great things with partners, which we highlighted in our upfront and other places. We're doing some really tremendous work in a very short period of time.
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B
Remind people, I mean, it does feel like this just started, but there's already been a journey when it comes to ad tech. You originally started with partners like Microsoft before building your own stuff. It sounds obvious when you talk about how you're a tech company, but you might have said, why, you know, why do we need to build our own stack? We can just plug into what's in the market, what led to that decision and what's that been like.
- [08:00]
A
So again, this predates, this predates me. But if you think about it, when we launched the ads business, which was in 2022, like we needed to move fast, right? And so partnering enables you to move faster than building. As we grew, we realized that in order to move at the speed that we wanted to at Netflix and with our partners that it over time we'd be able to move faster if we actually owned our own tech. It also gives us the ability to leverage data in a unique way, leverage our IP in a unique way when it sort of sits within our own ecosystem. So for all those obvious reasons, you know, we, we decided to build our own ad stack and now we're, you know, as of last year, we're 100% over. So now as we're meeting with clients, as we hear interesting new ideas we're co developing, we're doing a lot of interesting stuff. When you own your own tech, you're able to do that much, much faster than when you're on a partner technology. And so in the case of what we're building on a global scale, it's really enabled us to move much more quickly just in the year and Change. We've been over as a ads business.
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B
All right. Like we mentioned, this was a. I remember being surprised because I hadn't. You had your, you had not been speculated about for this job as I remember. At least it was very, it was a highly coveted gig. How did you, how did your role. Because I knew, I knew you as a digital person who went to Ampersand, which is like a, you know, combination of old school TV and traditional. How does that background help you bring what, you know, bring what you needed to this job?
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A
Yeah, well, I mean, obviously a very welcome email. When my now boss, you know, I get an email from, from my now boss asking me the dinner. Like that was a great email to get.
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B
That's exciting to.
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A
Sure. For sure. You know, I think my background is, is digital building technology, building data driven businesses. The reason that know I got pulled over to Ampersand at that time was, you're right, it was a traditional business. But if you recall, we were pivoting to become, you know, an audience based data driven business, which is sort of my sweet spot in conjunction with technology and programmatics. So, so there is where sort of I did a, a personal, lots of personal growth and a mind meld of bringing this programmatic digital tech focus into a more traditional linear world to make addressable television more data driven, which is what we did over, you know, five and a half years that I, that I was there. So bringing that all back to Netflix. You know, Netflix has this very unique opportunity, I think to bring at a global scale art and science together our tremendous IP that we, that we sit on in conjunction with great technology to bring data driven and really powerful advertising outcomes to brands leveraging data driven into the CTV world. So to me it's just sort of the next chapter of a book of how we grow brands by leveraging smart data and smart technology to optimize and make, you know, better decisions and partnerships
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B
you've been thinking about doing for a long time and building up towards.
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A
I always say it's another chapter of the book. Right. A lot of these things, we think of them as different. But if you think of the principles of the early days of programmatic. Right, which is, you know, people thought we were crazy. I mean you were around, I remember talking to you in past lives on this like programmatic and data driven media and, and automating how to buy. At one time we were sort of strange people in the corner of a room. Right?
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B
Yeah. And if you explain what the hell these people are doing.
- [11:26]
A
Exactly. Right. And so 25, you know, years later, 20 something years later, what we're finding is that it's actually very relevant to move that thinking and that strategy into new channels, including traditional television and now CTV as it continues to grow. Because for a while CTV was gaining share, but didn't really have ad supported eyeballs. Now obviously, ad supported eyeballs are increasingly moving into ctv. So to me, it's just a natural evolution of, of sort of where to bring the, you know, the data intelligence layer into ctv.
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B
Right. And the ad tech wasn't there in the beginning and now it's, it's completely being reinvented.
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A
The ad tech and the, and the scale, frankly.
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B
Yeah, for sure.
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A
Yeah.
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B
Okay, so we're talking, we're talking about like the, the vision. What about right now? Like, what's the, what's the market like? I've talked to people, you know, it seems like the upfront, obviously sports is hot, but we're like, we're in a weird world where the consumer is spending, the economy's growing, but then everyone's like, oh, inflation, gas prices, it's, it's a little bit weird. What's the market been like for you guys?
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A
Yeah, it's a lot. It's definitely a lot to navigate because as you say, there's a lot of different dimensions that coming into play all at the same time. And naturally, you know, different brands depending on the category and sort of where they sit, you know, have different sort of pushes and pulls on their businesses, which obviously, as a partner, we're always navigating, I think in these, in these times, sort of certainty about a publisher's ability, a publisher like ours, ability to prove that they can build brands and sort of do more than more with less. Right. Again, going back to the fewer, more strategic partners, that becomes even more important in times of uncertainty, Right. When a brand has to be even more thoughtful than they already are, which is, I'd say, quite thoughtful over where to spend a dollar when you come to a platform like Netflix. You know, strong technology, strong content. Right. Ability to drive fandom and outcomes and all these sorts of things. So to me, performance matters, but quality matters. And we've shown as a platform, as a global platform, that we can drive both of those things. So for us, it's just continuing to work with our partners to show our value, which we should always be forced to do. No, no issues with that. And we have that, you know, that repetition again, that I think matters a lot to brand. So definitely things that you need to keep your eyes wide Open on. Because these are real, you know, these are real macroeconomic dynamics, which I don't want to underpin. But I do think now and in the future, it does impact different publishers differently and depending on sort of like the raw assets that sit within them.
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B
All right. When it comes. I mentioned sports, when it comes to the NFL, you guys kind of jumped in really quickly the last couple of years. Now you've tripling the number of games you're going to do in the beginning. When everybody, I think most. Most big tech companies get into the NFL, it's sort of like, don't mess this up. Right. Make it a traditional broadcast and ad experience. Are you mostly sticking that to that? What's that? What does that look like for you going forward?
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A
Well, if you saw Beyonce ball, I would say we can pretty much say no, we're not trying to, you know, we approach things differently here generally, I think it's fair to say. And I think in the case of NFL, and part of the reason that I think, you know, not to speak for the NFL, but like, the partnership has grown, right? From what it was to now we're, you know, this is not just Netflix investing in NFL, but it's reciprocal, Right. NFL is also investing in Netflix.
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B
They're figuring you out as well, right?
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A
Exactly. And we have the ability to work together to really, like, bring the right advertising and the right opportunities that fit for, you know, across sort of the spectrum of what the audience brings to Netflix. And we do bring, like, our global. Our global nature is unique. For the NFL, for example. Right. We bring sort of a different view. The Beyonce bowl being a great example. Like, that is not a typical NFL game. Right. That looks like a different type. You know, that's a different type of event typically. So I do think we're bringing sort of our Netflix lens to. And it's, by the way, not just for NFL, but other sports events that we've hosted, too. We're bringing a different lens. It's sort of part of our, like, how we think about doing things differently and kind of bringing fandom into the events that have fans. But by doing that, we're expanding the fandom. Right. Because we actually drove a different audience because of the way we approached NFL than what they would have traditionally gotten.
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B
Younger, broader.
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A
Yeah.
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B
More international.
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A
Exactly. Right. And also as we're introducing more like, dynamic ad insertions, et cetera, into live events, like, I just think that will give us even more opportunity to be more creative over time. So I think. I think the answer is no. We're not trying to replicate traditional. I think there's going to be parts that move over and make a lot of sense and then there's going to be parts that we, you know, get a bit more creative and unique with and put the, the Netflix stamp on as, as I think we've shown already.
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B
On that note, are you like, are you impatient that like, do you want more, more interactivity and more dynamic advert in CTV across the board? I think people were hoping that would happen faster maybe. Like, are you, do you feel like the market is ready for like the whiz bang ads beyond, beyond the 30s and fifteens?
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A
We're seeing, I think like a lot of things. We talk about things as, as, like either or. I think there's places for both because I think generally like personalization of ads make a lot of sense. It makes a lot of sense in certain cases. We shouldn't lose the fact that the power of television, and I don't mean CTV by the way, CTV inclusive in the statement, but traditional linear television. Why was it so powerful for so long? Was so powerful for so long. Because reaching a large audience at one time with a single message, with a common story.
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B
Yeah, that's, that's still what tons of brands want.
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A
Totally. And it's important. Right. Because you can't drive people to the bottom of the funnel if you're not building the top of the funnel. Right. What I think is very unique about CTV is that you can show both and get results back much faster than you can in linear. So the reason that I love this notion of data driven television as opposed to data driven digital, is that you can bring the fast movement of digital measurement and digital targeting into television and bring the power of data driven audiences and measurement into an audience that is much, much larger than the traditional digital world. Right. So you're hitting broad spots of audiences. So I think we're going to do more of it, but there's places for it and, but you don't want everything to be personalized either because then we, we lose sort of the signal and the noise. Exactly. Yeah.
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B
We're talking about all these innovative things. You're doing data driven stuff. What about, do brands come to you guys because of that frequency you have in some of the big shows? Do they say, you know, I want to be on the premiere of Wednesday or Stranger Things or are most of them coming to you with more audience based buys and that kind of stuff?
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A
We do all of it. We do all of it. And it depends on the brand and what they're trying to accomplish. We definitely do, you know, we do integrations into our shows, like actual physical integrations of brands into our content. We do sponsorships around our content. We do lots of, you know, lots of things. We did a really cool, you know, Happy Meal, K Pop demon hunters with McDonald's. So like sort of consumer products. So all of those things definitely exist close to content. What I think is really important and by the way, this is kind of the combo of art and science. Right. Fandom. Fandom drives brand awareness. Fandom drives sales also. Right. Not just data driven media and sort of lower funnel measurement. So we do both. What I think is interesting is the brands that have been most successful is not the ones that do one or the other. There's the ones that do all of it and sort of have like a consistent drumbeat over time. Because again, the fact that our audience comes back every week, brands that take advantage of that repetitive nature are driving sort of better results over time, as you might imagine. Right. Like coming on and off as you're building a brand is sort of not as effective over time because you build brand through repetition and different messaging and all that sort of stuff. So we'll, we'll continue to do both of those things. We're definitely leaning more as you, as we talked about earlier, data driven audience. Programmatic is still a huge, if you think about it, a huge amount of overall spend and CTV and just digital channels in general. So we'll continue to lean into that. Each one of our top shows, by the way, is only 1.5% of viewing at any given point in time. So if you think about it, even if you integrate with one of our biggest shows, there's a huge amount of audience on Netflix that isn't necessarily watching that show in that moment.
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B
The old when you have 15 hours on the air every week and one show would represent, you know, exactly something huge. I will give you my Stranger Things story though quickly. I was.
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A
We were.
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B
We were. We were. We. We had booked our first cruise over the holidays not thinking about oh my God. And my, my kids are 16, 12 and 12. So it was like sweet spot, had to watch it. So we watched the. On New Year's Eve in the, on in our cruise room, cruise ship room, on my laptop and like praying the, the WI fi would hold up. And we made it. It was awesome.
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A
Oh, that's awesome. Love that story.
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B
Very fun.
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A
That's fantastic.
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B
How on, you know, you noted how often are brands coming to you with their own data and trying to Match up audiences. Yeah, because there was so much excitement around the clean room thing in television. I don't, I'm not sure how fast that really happened. But now you guys, you seem like you have the capabilities. How often does that come into play?
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A
We do, we do. You know, not all brands have their own first party data that they leverage at scale, but for those that do, we have multiple ways that we can work with them. And to your earlier discussion, like, clean room, as you know, is something near and dear to my heart for a long time personally. And that's something that we've really leaned into over the past couple years here as well. I just think that's the way that, you know, data collaboration is going to continue to happen in the future. So it's definitely, that is a key part of our strategy for the brands that have their own first party data. So, yeah, we definitely do that. Again, going back to our earlier discussion, even for brands that have their first party data, we're still working with them in lots of other tactics. Right. Because that's a way to reach the audience that they know or might, in some cases, you might suppress audience. Exactly. That's right. So to me, it's a piece of the way that we can work with brands. But even those that have scaled data, we work with them in many other ways.
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B
Last one, Nicole, is you. We talked so much about how you're, you're an entertainment, entertainment platform. You're doing all these like big tent pole kind of shows. How much pressure are you under to push outcomes? You know, you're not, it's not a shoppable platform necessarily today. Like what is that conversation like right now with brands?
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A
I don't think of it as pressure, I think of it as accountability, which I think is totally fine and totally appropriate for brands. Like, we have to show our value. When again, going back to the. As every brand is spending their dollar, how do we show that the value that you get from Netflix is superior to spending a dollar elsewhere?
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B
That's just part of the deal.
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A
That's part of the deal. It's part of our responsibility. So, so we take that very seriously. And a lot of the tools that we're building internally and in partnership with agencies and clients directly are, I think, proof. Proof is in the pudding. Right. We're building all these integrations, sort of not shying away from those things because data collaboration is what exposes those. Those proof points to brands and to agencies. Right. Whether it's an agency tech or a brand specific DCR on shopability specifically, I think there's, there is a place for it. Shopability works only if engagement is high. Right. And so, like, I think, like a lot of things, we talk about shoppable ads, and I think it's going to be a piece of the puzzle. That's not going to drive 100% of outcomes for TV, though. You know what I mean? There's going to be lots of other ways that we can show incremental value, incremental revenue, you know, return on ad spend, all of these metrics that matter to brands to show that we're driving results for them. I don't think it needs to happen on the TV screen in order to prove that. There's lots of other ways that you can prove it as, you know. So I think it's going to be a piece of it, but not, you know, not, not all of it.
- [23:38]
B
All right. Well, Nicole, awesome conversation. Very exciting time. So glad we had talked. Let's, let's chat down the road. But congrats on all the success here.
- [23:44]
A
Thank you. Thanks so much. Good to see you.
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B
A big thanks to my guest this week, Netflix, is Nicole Pangas and my partners at Vizio. If you liked this week's episode, please take a moment to rate and leave a review. We have lots more to bring you, so please be sure and subscribe. And we'll see you next time for more on what's next in media. Thanks for listening.