Love this— the one I really hate is when they run the exact same ad over and over. In a lateral thought this from New York’s water department: “
NYC saw a significant reduction in water usage throughout the five boroughs during the Super Bowl’s [Bad Bunny] halftime show yesterday. In the 15 minutes right after the show ended, there was a spike in usage equivalent to 761,719 toilets flushing across town.”
It seems like a lot of the moral hazard comes from the double-charge feature of skipping ads, and while I see your logic on streamers keeping whatever the brand paid for that inventory, it doesn't seem necessary to make the thing work. I think it'd be more robust if the advertiser did get refunded if the user skips the ad, makes the whole system more win-win-win, and there's enough competition between streamers now that treating advertisers fairly in this way would win more ad $.
The tricky part with a full refund is that it essentially becomes dead inventory; if 10% of ads get skipped, the targeting either needs to increase CPM prices by ~10% or the need to run 10% more ads to break even.
Although…I guess it would incentivize streamers to show high-skip ads less often. If that’s the case, prices would probably become more correlated with the quality of the ad: if an ad is annoying the CPM goes up to adjust for skips, and if it’s engaging then CPMs can come down. It could absolutely work out to be a clearer win-win-win from an experience perspective.
To your point, competiton would probably also let advertisers capture more of the fee if this became standard. I actually wonder if this could become a platform lock-in play: streamers refund the fee, but targeting only improves on Hulu. Jumping to Disney+ means starting over on getting your ads to the right people.
It's not dead inventory if the consumer pays to skip the ad. Netflix is getting their $0.03 either way, either from the advertiser or the consumer, but just isn't allowed the double dip.
But you're right that incentives would be better if the streamer gets very slightly less from a skipped ad than a viewed ad, and similarly for the advertiser to only recoup maybe ~90% of the $0.03, to incentivize both to serve high quality and well-targeted ads.
Or maybe that just means ads will have more boobs and explosions, serving ads that folks won't skip can still get Goodhearted in a way that doesn't lead to quality.
I guess it depends on whether the skipped ad is replaced; if you go from 3 to 2 ads after skipping and the $0.03 goes to the advertiser, Netflix has a $0.03 opportunity cost from not showing the ad at all.
Maybe it could lead to emotional blackmailing though; will you feel like a bad person if you skip the really sad ad raising money for sick animals? The outcome could be showing the most guilt driving ads possible to stop skips. "Don't look away, we need you to save these pandas - also consider Geico for your home/auto insurance."
But the consumer's $0.03 doesn't go to the advertiser, they just get their original $0.03 refunded. Advertiser puts up 3 cents to serve me an ad, I skip, Netflix gives back their 3 cents BUT take 3 cents from me. Netflix is still plus 3 cents, no opportunity cost, they don't care who gives them the 3 cents
We at NDI have a tough grading rubric for ideas 😁. But you’re right, this should at least be a 4; it doesn’t quite change the world, but I’m ready to say “I called it” when Hulu adopts this in 2027
Love this— the one I really hate is when they run the exact same ad over and over. In a lateral thought this from New York’s water department: “
NYC saw a significant reduction in water usage throughout the five boroughs during the Super Bowl’s [Bad Bunny] halftime show yesterday. In the 15 minutes right after the show ended, there was a spike in usage equivalent to 761,719 toilets flushing across town.”
Hey now! Whole life is actually not as shitty as term. Term is a LOT easier for fly-by-night scammers to skip out on.
The real question is, who is the better advertiser? 😁
It seems like a lot of the moral hazard comes from the double-charge feature of skipping ads, and while I see your logic on streamers keeping whatever the brand paid for that inventory, it doesn't seem necessary to make the thing work. I think it'd be more robust if the advertiser did get refunded if the user skips the ad, makes the whole system more win-win-win, and there's enough competition between streamers now that treating advertisers fairly in this way would win more ad $.
The tricky part with a full refund is that it essentially becomes dead inventory; if 10% of ads get skipped, the targeting either needs to increase CPM prices by ~10% or the need to run 10% more ads to break even.
Although…I guess it would incentivize streamers to show high-skip ads less often. If that’s the case, prices would probably become more correlated with the quality of the ad: if an ad is annoying the CPM goes up to adjust for skips, and if it’s engaging then CPMs can come down. It could absolutely work out to be a clearer win-win-win from an experience perspective.
To your point, competiton would probably also let advertisers capture more of the fee if this became standard. I actually wonder if this could become a platform lock-in play: streamers refund the fee, but targeting only improves on Hulu. Jumping to Disney+ means starting over on getting your ads to the right people.
It's not dead inventory if the consumer pays to skip the ad. Netflix is getting their $0.03 either way, either from the advertiser or the consumer, but just isn't allowed the double dip.
But you're right that incentives would be better if the streamer gets very slightly less from a skipped ad than a viewed ad, and similarly for the advertiser to only recoup maybe ~90% of the $0.03, to incentivize both to serve high quality and well-targeted ads.
Or maybe that just means ads will have more boobs and explosions, serving ads that folks won't skip can still get Goodhearted in a way that doesn't lead to quality.
I guess it depends on whether the skipped ad is replaced; if you go from 3 to 2 ads after skipping and the $0.03 goes to the advertiser, Netflix has a $0.03 opportunity cost from not showing the ad at all.
Maybe it could lead to emotional blackmailing though; will you feel like a bad person if you skip the really sad ad raising money for sick animals? The outcome could be showing the most guilt driving ads possible to stop skips. "Don't look away, we need you to save these pandas - also consider Geico for your home/auto insurance."
But the consumer's $0.03 doesn't go to the advertiser, they just get their original $0.03 refunded. Advertiser puts up 3 cents to serve me an ad, I skip, Netflix gives back their 3 cents BUT take 3 cents from me. Netflix is still plus 3 cents, no opportunity cost, they don't care who gives them the 3 cents
AH I see what you're saying now, you're totally right!
Only 3.5!? I think this is the best idea yet.
We at NDI have a tough grading rubric for ideas 😁. But you’re right, this should at least be a 4; it doesn’t quite change the world, but I’m ready to say “I called it” when Hulu adopts this in 2027
Yes pls!