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Article by Megan Graham, CNBC.
- A new report from Forrester Research predicts that marketers will double their spend on marketing partnerships with Netflix, like product placement and “other creative marketing integrations with brands.”
- This will come as marketers increasingly seek more natural and less intrusive ways to reach consumers, instead of bombarding them with traditional ads.
- Netflix steadfastly denies that it looks to paid product placement in shows as an important current or future source of revenue.
As marketers come up against economic uncertainty in 2020, they will increasingly turn to Netflix to help get their messages to consumers, according to Forrester Research. In a report shared with CNBC Tuesday, the firm predicts that marketers will double the amount of money spent for product placement or other creative marketing integrations with Netflix.
Although the analysts expect Netflix to remain ad-free in the traditional sense, they predict the company will “redefine advertising opportunity by doubling its investment in product placement and other creative marketing integrations with brands.” This would be one way of connecting with consumers in a memorable way “without the creepy personalization and annoying disruption plaguing today’s ads.”
Advertising insiders have often predicted that Netflix will eventually start showing ads, but the company has steadfastly insisted they’re wrong — in response to execs speculating on Netflix’s advertising plans at Cannes Lions, Netflix called comments “wishful thinking from an advertising conference.” Showing ads could deflect subscriber growth: A study earlier this year found23% of respondents would definitely or likely drop their Netflix subscriptions if the service added advertising at its current price point or a dollar cheaper.
A Netflix spokesperson said the prediction is inaccurate and that it’s not doubling its investment in the space, whether financially or in team size. The company said just because a brand is shown on a Netflix show doesn’t mean it has been paid, and said it’s rarely paid for these placements.
But Jim Nail, principal analyst for B2C Marketing at Forrester, believes marketers will keep knocking on Netflix’s door, as audiences are increasingly turning away from traditional TV.
“We know these people aren’t … meditating or playing with their kids. They’re watching stuff, they just happen to not be watching traditional television,” he said.
“The product placement stuff is a nice way for them to tap into some of that revenue without risking the customer relationship in the way that announcing an ad-supported option might,” Nail said.
An arm’s length relationship
Although product placement is all over Netflix, the company says that a lot of the placement is driven by show creators rather than Netflix, and that brands seldom pay Netflix directly for placement.
Forrester points to an estimated $15 million worth of product visibility from brands like Burger King and Coca-Cola in the third season of “Stranger Things…
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