Are we actually going to voluntarily look at ads?

16

October

2022

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Next month, Netflix will launch a pilot for a new streaming plan. For about $7 per month, users can use the basic version of Netflix but with advertisements. This is about $3 cheaper than the cheapest ad-free version of Netflix. This new version provides access to approximately 90-95% of the streaming platform’s content and shows per hour 4-5 minutes of advertisements. To me it sounds like the Netflix hell, voluntarily adding advertisements to you Netflix account but investors apparently see a future in it. Since the announcement of this pilot, Netflix’s share price is up with 5.4% where it decreased 62% in the six months before the announcement. Not only investors but apparently also competitors of Netflix consider it a promising plan. Disney+, HBO Max and several other companies have created similar plans.

The question is, why do I, as a Netflix user, perceive this as a very bad plan while they still see it as promising? Customers’ needs and preferences differ and that is exactly why this strategy can work. Customers can be divided into various customer segments. This segmentation can be done in several ways: companies can assign customers to a particular segment or customers can assign themselves to a segment. The latter technique is the one that Netflix is exploiting with this plan. Netflix uses ‘versioning’ as a pricing strategy. With this strategy, a company offers different versions of the same product or services for different prices. In this case, the versions consist of either a cheap Netflix account with ads or a more expensive account without ads. Customers self-select themselves to the ad or ad-free version based on their willingness to pay.

So, promising days are coming for Netflix where they hopefully expand their customer base with lower willingness to pay customers. And me? As part of the opposite customer segment, I will happily keep paying $3 a month more to avoid those ads.

https://indianexpress.com/article/technology/tech-news-technology/netflix-ad-supported-plan-to-launch-in-november-at-dollar-7-a-month-8207620/

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October

2015

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I guess you’ve all come across these ads on the internet. Some of you may have clicked on them. Lately, these kind of ‘ads’ are disappearing. Those were/are all scams to get your personal and financial data or infiltrate your computer with viruses. Other (real) advertising banners have also become less and less effective, amongst other things thanks to these scams. What can we do to make online advertising effective again?

From a jaw-dropping 50-90% Click Through Rate to a poor 0.1% CTR (MacDonald 2015). You could say banner ads are not an effective way to promote your product, service or company. There’s also a term describing the phenomenon where website visitors consciously or subconsciously ignore banner-like information. This is called banner blindness (Nielsen 2007). Yet, there are some ways to improve your (banner) advertising.
http://tint-blog.s3.amazonaws.com/blog/wp-content/uploads/2015/01/banner-blindness-examples.jpg
Media rich engagement ads are ‘voluntary’ ads. In other words, they expand and play, once you hover above these interactive ads more than two seconds. Beware, consumers may also develop banner blindness to these engagement ads.
Banner blindness does not extend to audio, thus Podcasts are another effective alternative to traditional banners. For example, Spotify uses audio advertising like this. However, hearing the same voice and text over and over again, can be very annoying for consumers.

The opposite of Sponsored Posts and a very effective kind of advertising posts is User Generated Content. In short, consumers themselves post about you on their social networks creating a ‘buzz’. Be careful though: this ‘buzz’ can also be a negative one.
The idea behind Content Marketing is not creating ads that look like content, but actually creating content. “Don’t sell anything, just be useful.” Take a look at CMO.com, Adobe’s initiative (MacDonald 2015).

Another great way to increase advertising effectiveness is not to improve these banners, but rather on how to replace these ineffective (banner) ads. The answer to this problem is: using apps.
Starbucks does a tremendous job by using their app to involve consumers. ‘For Mobile Devices, Think Apps, Not Ads’ (Gupta 2013) discusses some tips to increase this consumer involvement:
– Add convenience
– Offer unique value
– Provide social value
– Offer incentives
– Entertain
http://www.brighthand.com/assets/29676.png
The Starbucks app does more than just advertise its products. If you’re interested, you can read more about it in the article.

Do you know other new, creative ways to advertise? Let me know in the comment section below!

References:
– Gupta, S. (2013) ‘For mobile devices, think apps, not ads’, Harvard Business Review 91(3) 71-75.
– MacDonald, M. (2015) ‘Better than Banner Ads: Smart ways to spend your ad dollars in 2015’ via http://www.tintup.com/blog/better-than-banner-ads-smart-ways-spend-ad-dollars-2015-muriel-macdonald/ on September 23, 2015.
– Nielsen, J. (2007) ‘Banner Blindness: Old and New Findings’ via http://www.nngroup.com/articles/banner-blindness-old-and-new-findings/ on September 23, 2015.

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