Netflix Advertising President Amy Reinhardt has begun the search for a new ad sales chief, and while much is still unclear, it’s clear that whoever Reinhardt hires will be someone with stronger roots in technology than Madison Avenue, according to people familiar with the matter.
To get an idea of ​​how Reinhard is approaching the hire, Business Insider spoke to 11 people with inside knowledge of the hire or close to Netflix’s advertising business, who spoke on the condition of anonymity to protect their relationships with the company.
Netflix is ​​conducting a broad investigation that includes employees at rival technology and entertainment companies such as Amazon, Roku and Warner Bros. Discovery, said a person familiar with the process.
Some of the executives with whom Netflix has had at least preliminary discussions recently have extensive digital sales experience, including former Disney EVP Lisa Valentino, who ran part of the company’s digital strategy, WBD’s Ryan Gould and former WBD executive Jim Keller. Other insiders who see similar credentials as a possible candidate include Pooja Midha, EVP and GM of Effectv, the ad sales arm of Comcast’s cable division.
“They’re looking for someone who not only understands TV investing and linear TV, but also has the digital expertise to build out the product and process,” said one person who has spoken to Netflix. “They’re really looking for a unicorn, and because they’re investing in sports, someone with sports experience is going to be important.”
Reinhardt has told some sources that he wants a leader with a strong background in ad products and programmatic sales, which are becoming an increasingly preferred way for advertisers to buy, five people with direct knowledge of the matter told BI. That would be a different person from Naylor, who held leadership roles at Snap Inc. and Hulu and was best known for his deep ties to the advertising business.
According to people who have spoken to Netflix, Reinhardt is still figuring out questions such as how much Netflix should rely on automated versus direct sales, how much it should use outside partners to fuel growth while building out its own ad server, and how much valuable customer data, such as household income, should be shared with advertisers.
Netflix has built out its advertising team by acquiring traditional TV networks and ad agencies, as well as new digital platforms. But Netflix is ​​at heart a technology company, and Reinhart’s conversation suggests that the center of gravity of its advertising business is in technology and product, not Madison Avenue.
“They believe there is a lack of rigor and discipline in ad sales,” said a person who had initial conversations with Netflix.
Peter Naylor at Netflix’s 2024 Upfront presentation. Dimitrios Kamburis
Sources said Netflix’s ads clashed with the product.
Netflix is ​​the world’s largest streaming company, with 278 million subscribers worldwide, but it is turning to new areas like advertising and gaming (both under co-CEO Greg Peters) to continue to grow.
Management expects advertising to eventually account for 10% of Netflix’s revenue, but growth has been slow to materialize. Peters addressed the issue during the company’s second-quarter earnings call, saying ad revenues aren’t keeping up with the growth of its ad-supported audience and that Netflix has a lot of work ahead of it to build out all the features advertisers want.
That task now falls to Reinhart, a Netflix veteran and advertising industry outsider who was named president of advertising in October 2023.
Netflix’s ad rollout initially faced friction on the product side, insiders said, and Naylor clashed with John Whitticomb, who served as Netflix’s vice president of ad products under Reinhardt, over what products to offer to advertisers. Under Whitticomb, Netflix has allowed advertisers to buy ads through technology companies such as Google, The Trade Desk and Magnite, and it also has plans to build its own in-house ad server to help advertisers leverage their buys.
Whiticomb was focused on prioritizing programmatic tools that would help the company scale to advertisers of all sizes, rather than features that were particularly important to Naylor’s larger advertiser clients, such as specific geo-targeting capabilities or the ability to block ads from appearing next to content deemed inappropriate, the people said.
Netflix is ​​also resisting giving advertisers access to certain information they rely on to verify the delivery of their ad campaigns, citing user privacy concerns, according to people familiar with the matter. It’s possible the company has plans to build such capabilities in-house in a privacy-preserving way, but it could take longer. Big tech companies are facing intense scrutiny over how they handle user data.
Netflix officials said those issues are hampering their sales team in this year’s TV ad sales, where entertainment companies make pitches for about $70 billion in annual TV ad spending.
“The sales team is saying, ‘If you want to drive big numbers, you have to give advertisers the tools they want,'” said a second person who has spoken to Netflix, who said Reinhart’s decision to keep Whitticomb on board was a sign that she was prioritizing product over salespeople.
Insiders said the sales team clashed with product over how much of Netflix’s highly popular ad slots, such as NFL games, should be sold as part of larger ad packages rather than sold directly.
A Netflix spokesman denied that Messrs. Naylor and Whitticomb were at odds over product and said the company doesn’t prioritize certain advertisers over others in its programmatic ad deployments. The spokesman added that the company has allowed geographic targeting since the launch of its ad-supported plans.
The spokesperson also said the company is “very proud” of its pre-sale results, pointing to an earlier announcement that sales were in line with expectations and up 150% over last year, but did not disclose the figure.
Netflix had a slow start with advertisers
Netflix’s embrace of advertising after shunning the ad business for so long has been one of the hottest topics in the advertising industry in recent times. It created excitement among advertisers when it launched its ad tier, Basic with Ads, in late 2022. Advertisers were eager to place their ads near Netflix’s big-name shows, but streaming ad inventory was scarce at the time.
But the effort got off to a rocky start: Some advertisers thought Netflix’s initial prices were too high for a small, ad-supported audience and a basic service, and Netflix missed its audience goals for some advertisers.
Amazon then flooded the market with Prime Video ads, promising to reach 115 million U.S. viewers right from the start. By contrast, Netflix says its cheaper ad tier has 40 million monthly users worldwide, and advertising experts estimate its U.S. subscriber base at about 20 million.
There have been other hiccups along the way: Some advertisers have criticized Netflix for relying too heavily on its original partner, Microsoft, to kick off its sales efforts. Netflix has also revamped its ad sales leadership twice, replacing its first ad leader, Jeremi Gorman, after a year, followed by Naylor, who recently left.
Netflix has cut its ad rates to $29 per 1,000 impressions, roughly on par with Amazon’s, according to The Wall Street Journal, but some advertisers still believe they are too expensive for this year’s upfront.
In particular, ad buyers felt that Netflix’s initial demands of roughly $800,000 each for the rights to two NFL games it recently acquired and for ads to air across its ad inventory were out of step with the market.
Some people who have spoken to Netflix said they believe that, despite the drama and strategic questions surrounding the ad leadership change, Netflix is ​​able to build a strong ad business and will have no problem hiring a new sales leader, even as it focuses on automation.
“The company’s stock price is at an all-time high,” said a third person who has spoken to the company. “It’s the preeminent brand in streaming, and even if it wasn’t the preeminent brand in advertising, it could become one.”