Lowering the Bar.

Posted: January 30, 2020
Category: Journals
By:

From the first Netflix earnings call of 2020 and MarketWatch:

“What does it mean to “watch” a show on a streaming service? For Netflix Inc., it now means viewing at least two minutes. The streaming service noted in its first quarterly earnings report of 2020 on Tuesday that it has changed the definition of viewership — while Netflix used to consider any customer that streamed 70% or more of a single episode or film as having viewed that property, it now will count a view after viewing two minutes or any offering. The company admitted that it would boost the limited viewership numbers it provides by more than one-third.

“The new metric is about 35% higher on average than the prior metric,” Netflix executives said in their quarterly letter to shareholders. “For example, 45m member households chose to watch ‘Our Planet’ under the new metric vs. 33m under the prior metric.”

This, my friends, is the definition of insanity and a very slippery slope. 

I’ve said for years that the internet is largely an unregulated cesspool when it comes to advertising and false metrics. Does anyone remember Jay-Z’s album selling a million copies in five days? Except it didn’t. His streaming service, Tidal, is under criminal investigation in Europe.

Facebook logs a view for advertisers when a video plays for at least three seconds. YouTube uses better metrics and bills the advertiser when a user watches a complete add that’s 11-30 seconds long or watches at least 30 seconds of an ad that’s more than 30 seconds or interacts with the ad. Instagram has admitted to wasting billions of paid sponsorship dollars on followers that don’t exist. Every year Facebook deletes billions (with a B!) fake accounts.

According to Forbes, “In the six-month period from October 2018 to March 2019, Facebook said it removed 3.39 billion fake accounts. That’s twice the number of fake accounts detected and removed in the previous six-month period and over a billion more than the 2.37 billion people who actively use the social network on a monthly basis.”

Netflix is following Facebook down this insane rabbit hole. It’s one thing to hoodwink investors about the number of actual users and views but advertisers won’t tolerate it and eventually everything comes home to roost. Streaming services will need to significantly increase subscription costs or introduce more advertising, something Netflix has said it will never do. Uh huh, Facebook said the same thing. “We changed our minds,” is the most-common phrase ever uttered by companies that follow the dollar down these rabbit holes.

As a small business owner, not only can you not afford to behave like this (you have to count with dollars in the bank and lifetime customer value and return on investment, etc.) but you must also pay very close attention to any advertising platform or media channel that counts with funky math.

The most transparent and effective online advertising platforms right now, for my businesses, are Amazon and Google, respectively. 

I’m optimistic that Amazon can take over both of these categories (transparency and overall effectiveness). How much juice they will want from the squeeze is the only hurdle that remains for local service providers. But, rest assured, Amazon is coming for your advertising dollars.

I’d leap for joy if they allowed targeted in-package advertising for new movers, grocery deliveries and standard packages. It’s not a far leap for Amazon to allow local service providers to advertise in specific packages and via email footer ads with coupons for furniture assembly, appliance installation or lawn service. They have the best 360 degree view of their 101 million Prime members. Why not leverage those data points and sell to local service providers, after which Amazon could easily acquire or affiliate with the most successful of the bunch?

As a sound business principle, seek out and work with organizations that consistently raise the bar

Google has done this consistently for years and has allowed very smart marketers like Jimmy Marketing to help local service providers make a ton of cashola. Amazon will hopefully do this even better.

Everyone else, unfortunately, is feverishly lowering the bar. There is no excuse to follow them into oblivion.

Jared Brader

Jared Brader

The AuDExperts Files

Leave a Reply

Your email address will not be published. Required fields are marked *