Q&A: Netflix on Automation, Programmatic and TV

The two executives recently presented together at the SunTrust Robinson Humphrey 2015 Internet ampamp Digital Media Conference and that presentation can be reviewed hereYour Name Mike ZemanYour Company NetflixYour Title Director Global Programmatic MarketingSEARS What do you read to keep up with politics art and cultureZEMAN I am an avid reader of The Atlantic Time Vox Variety ReCode Wall Street Journal and Business InsiderSEARS What do you read to keep up with friendsZEMAN Facebook Twitter and Instagram are core Strava is key for my cycling buddies as wellamp160SEARS What do you read to keep up with our industryZEMAN Advertising Age Business Insider AdExchanger ExchangeWire The Drum Adweek MediaPost Wall Street Journal New York Times TechSEARS Whatamp8217s your favorite commercial of all timeZEMAN Huge fan of The Most Interesting Man in the World spots Dos Equis has been a phenomenal story in a tough category in recent years A classic case of an advertisingfueled brandSEARS With regards to advertising automation and programmatic what are Netflixamp8217s three biggest initiatives in 2015 ZEMANProgrammatic Marketing is foundational for our marketing as we roll out Netflix globally The amp8220efficient targeting scaleamp8221 it enables will be a critical pillar of our rolling out to 200 markets across the worldamp8220Individualized Marketingamp8221 As Neil Hunt our Chief Product Officer has conveyed there are no bad shows amp8230 but there are many shows with small but devoted audiences Marketing the right titles to the right people is paramount And programmatic is the foundation for thatWe seek to create mutually beneficial programmatic direct relationships throughout the world As an entertainment marketer we buy both audiences and environments On the latter we believe there are publishers whose brands still carry immense equity with their readers We seek to partner with those great brands across the world in a way that creates mutual advantageSEARS On average in the US market out of each 100 spent on media all media not just digital by Netflix how much today in 2015 is spent on automated or programmatic channels ZEMAN We are a very digital very programmatic marketer We have invested immensely in talent technology and partnerships in this space We are betting big on the role of these channels for the present and future of our marketing endeavors across the worldSEARS What will this number be in 2017ZEMAN Even bigger By 2017 we expect programmatic to enable substantially more value We are particularly excited about the prospects of more programmatic scale on the primary TVmonitor within the family roomSEARS Tell us the about the US advertising operations of NetflixZEMAN Marketing is a team effort at Netflix Marketing strategists digital experts partner marketing staff data scientists analytics teams and our agencies all contribute meaningful value Our programmatic marketing is done fully inhouse on a selfserveSaaS Software as a Service basisSEARS Draw an analogy between the automation of television and a baseball game Are we in the pregame Still driving to the stadium What inningZEMAN First inning maybe second batter A amp8220TVamp8221 is just a monitor amp8230 generally between 40 and 80 inches Programmatic marketing is just now starting to display on these screens mostly via OTT apps But the MVPD Multichannel Video Programming Distributor space is changing dramatically and virtual MVPDs will enable incredible opportunities on these primary screens over time as will adsupported SVOD Streaming Video On Demand servicesSEARS How can advertising automation help the strategy and planning functions directly or indirectly at an advertising agencyZEMAN I think agencies have an incredible opportunity to shift from amp8220buyeramp8221 to amp8220connectoramp8221 There is no benefit in trying to impede inevitable automation and workflow efficiency in what has for years been a business wrought with such inefficiency the RFP process spreadsheetbased planning etc Agencies can become powerful consultants and given their purview over the entire media ecosystem a connective tissue layer across the publishing data and analytics ecosystemsSEARS Can linear TV be automated yes or noZEMAN Once the shortterm fear of programmatic being a CPM amp8220race to the bottomamp8221 is overcome all parties will recognize that automation can be accretive to growth for all partiesSEARS What two or three events or happenings will accelerate the automation of televisionZEMANA broadranging redefinition of what is meant by amp8220televisionamp8221 including entities like YouTube Hulu and virtual MVPDsAn understanding by the linear ecosystem that audiencebased buying leads to CPM premiums to distributors and networks and increased value to advertisersA set of technologybuying platforms that truly connect the pipes between the buy and sell sides Today there is a lot of talk about programmatic TV We have found very little of it to be tangibleSEARS Transparency on media costs on data on inventory has become a lightning rod issue Should transparency be a negotiated benefit for the advertiser client yes or noZEMAN Less relevant to Netflix as we operate on a SaaSselfserve basis in this space Broadly I think the issue is overblown though Even when a marketer buys an ad impression from a publisher directly we donamp8217t know what percent of that is profit versus COGS Cost of Goods Sold Everyone should evaluate the benefit of what they are buying against its cost regardless of how that cost is composedSEARS Which of the following will accelerate the automation of site direct direct orders budget Pick all that applyDynamic access to all publisher inventory vs just amp8220remnantamp8221 or amp8220auctionamp8221 Ability to leverage publisher first party data Ability to leverage advertiser first party data against all publisher inventory especially premium Availability of rich media expandable units and larger IAB Rising Star formatsAbility to more easily curate audiences for specific advertisers across the premium content of multiple publishers All of the above ZEMAN F All of the aboveSEARS If you could go to the airport right now with friends or family and fly anywhere in the world for vacation who would you take and where would you goZEMAN My lovely wife and our three kids 8 5 and 2 Weamp8217d probably go Agriturismostyle in Chianti outside of Radda or CastellinaSEARS If you could create an endowment to fund any existing nonprofit you designated what lucky nonprofit organization would that beZEMAN I love the spirit and optimism of Stand Up To CancerSEARS What is your favorite restaurant in the worldZEMAN Frasca in Boulder Co Upscale FriuilianNorthern Italian cuisine done Colorado styleamp8230fresh and locally sourced with none of the snobbery and all of the fun Killer wine list tooSEARS Thanks MikeThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of Media Village management or associated bloggers

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Q&A: Netflix on Automation, Programmatic and TV

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