Sonder | Netflix wants its own advertising channel
Why would progressive Netflix want to buy an old-fashioned static billboard network? We explain why it is a smart move by the digital entertainment pioneer.
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Netflix wants its own advertising channel

Netflix wants its own advertising channel

One of the most forward-thinking businesses on the planet made a move this week which could well be the shape of things to come: they are buying a billboard company. This isn’t just any billboard company, this is Regency Outdoor which has large format billboards situated throughout Los Angeles but crucially, prime sites on West Hollywood’s famous Sunset Strip.

Shaking up the entertainment establishment has long been Netflix’s M.O. This deal would drive another stake in the heart of TV & Movie Studios as they drive to work every day seeing what is coming out this month on Netflix!

For years Netflix has been a fan of billboards. Perhaps through necessity in the beginning when rival TV Networks said “no thanks” to their ad dollars but as audiences fragmented (particularly their ‘off-the-grid’ audience), billboards proved to be an effective broadcast channel for them. With prime sites costing US$140,000 per month and the high volume of new programmes Netflix output, you start to see why owning your own billboard network makes sense.

Reports suggest the price for Regency is upwards of US$300M, which will take a few years to recoup if they simply use it for themselves. However, that is unlikely. By owning the proven advertising channel themselves they can easily rent the billboard out to other advertisers in exactly the same way Regency do now. Except with one, fundamental, difference: they control which brands advertise. No more Hulu, no more Amazon. Movie studios? Well that depends, will the movie be made available on Netflix?

If this deal goes through it delivers for them in multiple ways:

  1. A high profile marketing tool in the epicentre of the entertainment industry to keep Netflix top-of-mind amongst investors, viewers, studio execs and actors
  2. A highly profitable new revenue stream from selling billboard space to other advertisers
  3. Blocking competitors
  4. Leveraging space for broadcast rights deals

 

This is another fascinating step in the evolution of owned media, one that we believe represents the future. With many global brands already enjoying customer and revenue growth from their own media assets, the logical next step is to expand that ecosystem and reap even further rewards.