The Red Menace is real

Or Why Netflix is the biggest threat to Facebook, Google and Digital Advertising

No this is not a piece about the rise and fall of communism, political ideology, or propaganda. It’s about the current state of digital advertising.

“The Red Menace is real!” — read posters from the cold war.

Why?

Because politicians throughout history know this truth: if there’s one thing that can bring down a large, established system — say a nation — it’s an idea. An idea spread widely, believed deeply, and acted upon can be the iceberg to a Titanic.

What does that have to do with the digital advertising landscape? Here’s my thesis: I submit to you that Netflix is the biggest threat to the current digital advertising landscape, which is dominated by Facebook, Google, Amazon, and programmatic vendors.

You might think I say that because Netflix has a paid subscription, ads-free business model. As a services it steals valuable minutes of consumer attention away from Facebook, YouTube and other services that rely on advertising. That’s true! But that’s not why I think Netflix is threatening digital advertising. Or a least that’s not the most important reason why.

The bigger reason is that Netflix has created a specific market for an idea that fundamentally threatens how the ad industry works. Stay with me here — I’ll explain.

Going back to the party like it’s 1999

I grew up in the 90s. Back then, I’d plant myself in front of the TV every Saturday morning to watch my favourite show, a countdown of “best ads of the world.” Typically, this was a mix of clever beer ads, suggestive condom commercials (I grew up in Europe), and witty learn-a-foreign-language pitches. Interrupted, of course, by mediocre TV advertising.

I loved every minute. It was like watching back-to-back skits. Except that each skit was the same length: 30 seconds.

All that’s changed of course. Not so much in television; commercials are mostly made in 30-second blocks. I mean media, particularly advertising, and how we consume it. Or at least how marketers are told people consume media.

My thumb is hurting from watching videos!

We’re told the masses consume media with our thumbs. We’re told attention spans have shrunk so dramatically that only “thumb-stopping content” will break through into the consumer’s cerebrum, interrupting the robotic scrolling of our mobile feed.

Now, if it’s true that attention spans have plummeted … who benefits?

Sidenote: I’m not a conspiracy theory type of person, but stay with me.

To understand that, we have to sidetrack into how media has evolved in the past few decades. Specifically, how it democratized:

• Let’s look at TV. As you know, when satellite and cable TV disrupted the norms in the 80s and 90s, the number of channels exploded. It became easier for smaller broadcasters to distribute local content (not too dissimilar to what happened to Print far earlier in the century as printing presses became more cost-effective).
• Next, the internet rocket-charged this democratization trend, particularly for micro-creators. Suddenly, everybody was posting daily content, flooding screens worldwide with images, videos, and options.
• With that, the pendulum swung in favour of those who provide a podium to the micro-creators. The so-called gateways of the internet — e.g. Google and Facebook, and the platforms that they own, YouTube and Instagram — to name only two.

… Creating the opportunity for the data-driven marketer

As data piled up and technology evolved, data-driven marketing gained traction. Marketers began experimenting with different versions of ads to different targets in real-time, learning how to incrementally improve images and copy to optimize.

And it worked. It still does.

So we kept feeding the beast with more content from more sources, supported by more advertising, from more marketers.

Advertising accounted for 86% of Google’s revenue and 98% for Facebook’s revenue in 2017, Statistica tells us. The more we produced, the more data-points we provided that enabled more advertising (feeling like a hamster yet?).

According to Recode, 2017 was the year where digital advertising ($209B) surpassed TV ($178B). Marketers go where the consumers are.

Online marketers, always looking to find the newest thing and optimize, began introducing things like 6-second ads — in-part spearheaded by YouTube — requiring less attention span than ever before.

But wait — what about binge-ing?

How often do you binge-watch on Netflix? I did that last weekend, when the family was stuck sick at home. Hey … what happened to that 6-second attention span?

And a few months ago, when I asked a videographer: “What’s the ideal length of a video?,” he laughed and replied: “Somewhere between 6 seconds and 9 hours, depending if you ask YouTube or Netflix.”

Amid my infinite Instagram and Facebook feeds, all the articles and the tweets … I still manage to watch a movie, read a book or binge on Netflix every once in a while. Most people I know do too.

My wife just finished her fifth audiobook on audible this week; she got a badge (I get notified on my device). Yet, she hates sitting through that pesky YouTube ad for 30 seconds before her video and can hardly wait for the 5-second countdown to end.

Hmmm … what does that tell you?

I recently saw a presentation by a digital advertising provider that described the consumer as “Curious, Demanding, and Impatient”. And I thought: “Sounds like they’re describing a 6 year old.”

Yet I’ve seen six-year-olds get pretty lost in play, for a long time, when it’s a toy they love.

Enter the Red Menace

Perhaps you see now where I’m going with this? Just the same way the “shrinking attention span” idea as gave rise to digital ads slowly starting in the early 2000s, the binge-watching paradigm is threatening that ecosystem. And no other service in the past few years has done more to propel that idea into cultural mainstream than Netflix.

Here’s the reality.

It is true that we are expressing more impatience. But it’s because we can. One of the biggest reasons ads are shorter is because we never liked those boring old 30-second ads, and we sure would have clicked-out if we could have, back in the day.

If we’d really reduced our attention spans to 10 or 5 seconds or less … then there would be no rise of long-form content like Podcasts, and Audiobooks.

All hope is not lost

Smart marketers know that there is a better way. They always have. Remember the BMW commercial featuring Madonna and Clive Owen, directed by Guy Ritchie (2002)?

Or the H&M Holiday Advert with Adrien Brody (2016)?

For a more recent example, search for “Koho Dream Thief” to see a 10-minute ad that’s brilliantly produced. I think you’ll enjoy every minute.

Smart marketers have never been concerned with the length and size of an ad. They care about emotive value of the story behind it.

Then why the endless flak about shorter attention span?

The short-attention-span narrative feeds a specific purpose. Namely, to feed the advertising engine of the micro-creator economy.

To be clear, I’m not suggesting that some tech executive in a boardroom concocted a devious PR plot to sell a story and thus more advertising. Rather, this is a natural consequence of the new media economy. A circular relationship, arguably unavoidable.

However that idea is being prominently challenged with podcasts, binge-watching services, audiobooks, and yes… long-format brand storytelling. And Netflix is leading the charge.

At the end of the day, people do not hate ads because they are too long. They hate bloated, lazy, poorly-targeted ads. Ads for everyone, ad that don’t meet what they are interested in. Ads that don’t tell a story. Ads that are an interruption, a nuisance. Even more, they hate bad advertising. They always have. They always will.

And now on the internet they have a way to avoid those. I’m not saying that digital advertising is going to go end today. Media doesn’t perish that easily. But the landscape is slowly shifting.

Are you prepared?