Why did Netflix choose Microsoft as their ad platform?

Netflix chose Microsoft as their ad platform for several reasons. Firstly, Microsoft manages the fourth largest ad platform on the market, generating nearly $15 billion in annual revenue across LinkedIn job postings and Bing searches. Secondly, Microsoft had recently acquired a consumer ad platform, Xandr, from AT&T. This acquisition gave marketers access to Xandr's connected TV business, the Xbox platform, and Netflix's userbase. Additionally, Microsoft is the only ad tech giant without a streaming library, which was a favorable factor. Netflix's operating officer, Greg Peters, also mentioned that choosing Microsoft offered flexibility to innovate over time on both the technology and sales side and provided strong privacy protections for their members, which is crucial as Netflix's subscribers are its most valuable asset and it aims to protect them from invasive ads.

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So how did Netflix choose Microsoft?Microsoft manages the fourth biggest ad platform on the market with nearly $15 billion in annual revenue across LinkedIn job postings and Bing searches. But crucially, Microsoft acquired a consumer ad platform Xandr from AT&T just last month. This new deal would give marketers access to not only Xandr's connected TV business, but the Xbox platform, and now, Netflix's userbase. Also, Microsoft just so happens to be the only ad tech giant without a streaming library, which, didn't hurt. Netflix operating office Greg Peters also said choosing Microsoft "offered flexibility to innovate over time on both the technology and sales side" and offered "strong privacy protections for our members." Netflix's subscribers are its moat, so it wants to protect them from invasive ads or more will unsubscribe.

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How does this partnership align with Netflix's business strategy?

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The partnership with Microsoft aligns with Netflix's business strategy in several ways. Firstly, it provides Netflix with access to Microsoft's ad platform, which is the fourth largest in the market. This could potentially increase Netflix's revenue through advertising. Secondly, Microsoft's recent acquisition of Xandr, a consumer ad platform, gives Netflix access to connected TV business and the Xbox platform, expanding its userbase. Lastly, Netflix's operating officer Greg Peters mentioned that Microsoft offers flexibility to innovate over time on both the technology and sales side, and strong privacy protections for their members, which aligns with Netflix's strategy to protect its subscribers from invasive ads.

What is the potential impact of this deal on Microsoft's ad platform revenue?

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The deal could potentially have a significant impact on Microsoft's ad platform revenue. By acquiring the consumer ad platform Xandr from AT&T, Microsoft has expanded its reach to include Xandr's connected TV business, the Xbox platform, and now, Netflix's userbase. This broadened access for marketers could lead to an increase in ad revenue. Furthermore, Microsoft's unique position as the only ad tech giant without a streaming library could also be a factor in attracting more advertisers. However, the exact impact would depend on various factors including the success of the integration and the response from Netflix's subscribers.

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