Netflix Pondering Adding Advertising

Despite denials by Netflix CEO that the company is not adding paid advertising, he did say in USA Today "that to dispel concerns saying, 'No advertising coming onto Netflix. Period. Just adding relevant cool trailers for other Netflix content you are likely to love.'"  But truthfully, content that is not the main attraction, promotion, or whatever you may call it, is still a form of advertising.  How consumers react and accept these promotional messages will decide whether Netflix moves toward a paid advertising revenue stream.

Let me be clear, this is not a new strategy.  The same plan has been used before.  Before Bravo and AMC were full commercially supported networks, they were commercial free.  From promotional breaks came sponsorships of uncut content.  And as the desire to grow ad revenue grew, so did the transition to traditional advertising.  Other networks, like Disney Channel, may utilize promotional messaging, but a deeper look may see some sponsored content within these ads too. 

That Netflix is pondering a ad model is not necessarily a bad thing.  But if it moves to cutting content into pods so as to add commercial breaks, a move that Hulu and others offer, that would be disconcerting.  Of course, Netflix could create a free model with advertising to piggyback its subscriber model that remains ad free. 

Advertising is pushing deeper ahead in our digital footprint.  Instagram announced today that they too will add more ads into its feed.  How will its users react?  It seems to have worked for parent brand Facebook, so it simply was inevitable.  But should consumers revolt and leave the app for others, then a lesson may be forged for future brands.