Privacy is king: The ad-supported video gold rush is reaching a fever pitch at the same time that the advertising industry faces a privacy and addressability crisis. Both Disney and Netflix’s announcements directly confront those needs.
- Privacy was the primary theme of Disney’s announcement, which focused on the combination of Disney’s privacy-oriented user data from Clean Room and The Trade Desk’s Unified ID 2.0 initiative to create a replacement for third-party cookies and other identifiers of old.
- Netflix and Microsoft’’s announcements, though brief, both make mention of Microsoft’s “strong privacy protections for our members.”
- But while Disney is entering the ad-supported streaming race well-prepared with data from Clean Room, Netflix’s data collection and targeting capabilities are less well known.
Microsoft’s adtech rise: Microsoft has invested heavily in its advertising business over the last year, and a partnership with a platform as prominent as Netflix could help it eat up a larger share of the digital ad market.
- In December 2021, Microsoft acquired programmatic advertising company Xandr from AT&T in the hopes of creating a post-cookie ad marketplace that could address the conflicting needs of privacy and targetability.
- The company’s Q1 earnings revealed that search and news ad revenues grew 23% to $544 million. Ads have started appearing in Windows 10 search and toolbars, and Microsoft is also looking to introduce ads to cloud gaming and free-to-play games across computers and Xbox consoles.
- Those gaming efforts offer another overlap with Netflix’s interests. The streaming service has been fleshing out a gaming business that’s primarily focused on mobile games, but could find a comfortable partner in Microsoft should it attempt to make the jump to other platforms.
The big takeaway: After months of criticism, Netflix’s choice in Microsoft will go a long way to steady the waters around its ad-supported subscription tier while helping Microsoft solidify its position as a major player in digital advertising.