What sponsors need to know about Netflix’s ad-supported Tier

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FILE – This March 20, 2012 file photo shows signage at Netfilx headquarters in Los Gatos, Calif. Netflix reports quarterly financial results on Wednesday, April 15, 2015. (Paul Sakuma/AP)

What sponsors need to know about Netflix’s ad-supported Tier

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When I started my career at NBC, my office was located right across the hall from several screening rooms. The screening rooms were used by advertisers and their agencies to review episodes of programs they were considering sponsoring before they aired. It was a way for sponsors to make sure the content reflected their corporate values — or at least, would not reflect poorly on the product or company. If a television program included a car crash, for example, a car manufacturer might not want their ads to appear in the adjacent commercial break.

Knowing exactly the program content advertisers were sponsoring made good business sense then, and it still makes good business sense today. Despite the many changes that have taken place in the TV industry in recent years, context still matters. As Netflix launches its ad-supported tiers, it is worth reminding potential corporate sponsors of what’s at stake.

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Where a company spends its advertising dollars communicates to the viewer at home a lot about the company and its corporate values. Studies have repeatedly demonstrated that ads perform better when placed in a positive program context.

That will certainly pose challenges for would-be advertisers on Netflix. A 2017 study by the Parents Television and Media Council found more than half (57%) of Netflix’s original or exclusive programming was rated TV-MA. Here’s a sampling of what advertisers will be underwriting:

Monster: The Jeffrey Dahmer Story, which has received criticism for its glamorized portrayal of the serial killer. 13 Reasons Why has been tied to a 28.9% increase in suicide rates among U.S. youth ages 10-17 in the month (April 2017) following its release, after accounting for ongoing trends in suicide rates. Big Mouth, is an animated series about middle schoolers, frequently depicting 12- and 13-year-old children in sexual situations and engaging in sexual dialogue. Content has included a minor offering to perform oral sex on his own father; a minor exposing his scrotum; minors shown in a shower with erect penises; a minor urinating on another minor in the shower; a male minor character penetrating a female minor character with his fingers. Sex Education contains explicit depictions of sex and nudity — including male genitalia — mostly involving high school-aged characters. Cuties features 11-year-old girls in sexually provocative performances, and in one scene the main character snaps a picture of her genitals and posts the photo on social media.

And these titles reflect only a fraction of the explicit content Netflix produces and distributes every hour of every day. Faced with so much dirty laundry, advertisers have a lot to consider before they buy time on the streamer.

But advertisers can change the paradigm. Netflix faces massive pressure from Wall Street to maximize its revenue-per-subscriber metrics, and it will be forced to do whatever it takes not to alienate sponsors or potential sponsors. If advertisers don’t want to associate their brand equity with explicit sexual content (including content that sexualizes children), graphic violence, or raw, obscene language, they need to speak up.

It is in their interest to do so. Proprietary research from America’s biggest retailer, Walmart, found an 18% improvement in the performance of an ad when it was placed in a positive program as opposed to a negative program. Stephen Quinn, former chief marketing officer at Walmart once asked, “Do marketers understand that if they get $5.00 in sales for every dollar of advertising, those sales could be $5.90 simply by ensuring that their ads run on positive programming?”

The Association of National Advertisers’ Alliance for Family Entertainment found that the context of the programming has a significant impact on viewers’ perceptions of advertising. The group concluded advertising dollars will work 30% harder if placed in an appropriate context. The average change in purchase intent when ads were viewed in an appropriate context was +10.7 points. This means that an additional 10.7% of the audience improved their opinion about purchasing the brand when the ad was placed in a “family-friendly” program vs. a program with “adult-themed” content.

Likewise, researchers at Iowa State University also found that viewers are less likely to recall the products advertised if the ad appears in the context of a program that contains high levels of sex and violence. Results showed better memory for people who saw the ads during a neutral program than for people who saw the ads during a violent or sexual program both immediately after exposure and 24 hours later. Violence and sex impaired memory for males and females of all ages, regardless of whether they liked programs containing violence and sex. According to the study’s authors, “These results suggest that sponsoring violent and sexually explicit TV programs might not be a profitable venture for advertisers.”

Similar research from Ohio State University found violent and sexual media content may impair advertising’s effectiveness and ultimately deter purchasing. “We found almost no evidence that violent and sexual programs and ads increased advertising effectiveness,” said Brad J. Bushman, Ph.D., professor of communication and psychology at Ohio State University, and a co-author of the study. “In general, we found violent and sexual programs, and ads with violent or sexual content decreased advertising effectiveness.”

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Advertisers are uniquely positioned to influence programming decisions, and it is in their best interest to follow the time-tested strategy that context matters.

A former NBC and MGM executive, Tim Winter is the president of the Parents Television and Media Council (PTC), a nonpartisan education organization advocating responsible entertainment. Twitter: @ThePTC

© 2022 Washington Examiner

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