Netflix dominates streaming, but its ad business is still in its infancy. The company just changed its ad leadership for the second time in less than a year. VP of ad sales Peter Naylor is leaving, less than a year after he got a new boss, Amy Reinhard.
Reinhard is a longtime Netflix insider, but not an advertising insider. He became president of advertising in October 2023, replacing Jeremi Gorman, who had been in the role for just over a year. Gorman hired Naylor. Reinhard said in a statement that he would hire a head of U.S. and Canada Ad Sales to replace Naylor’s more global role. Naylor declined to comment.
Advertising is the second area under Netflix co-CEO Greg Peters’ umbrella, along with gaming, to undergo a recent leadership shakeup.
Some observers interpreted the news as a sign that Netflix views its ad business more as a programmatic play than one built on relationships forged at industry events and lunches.
There are a few reasons for that. In a shareholder letter issued Thursday ahead of its Q2 earnings report, Netflix highlighted its plans to launch an internal ad tech platform to give advertisers new ways to buy ads and measure their impact. The company also plans to start using ad tech firms The Trade Desk, Google DV 360 and Magnite to give advertisers more ways to buy ads on Netflix. The company also plans to hire more ad operations experts.
Netflix said in its earnings report that its advertising revenue is becoming a more meaningful contributor to its business, but it doesn’t expect advertising to be a major revenue driver until at least 2026 because it is growing faster than its ability to monetize its service through advertising. Netflix posted double-digit subscription growth for the fourth straight quarter, with subscribers up 16.5% to 278 million.
The idea that Netflix is making a bigger programmatic push and therefore has less need for an executive like Naylor, who is well-connected and respected in advertising circles, is puzzling to some. While Netflix’s ad business is still small, advertisers see it as a potential premium buy because of its push into live events, including sports. And Netflix regularly produces shows that get people talking.
Additionally, Netflix tries to package advertising with other things related to its shows, such as experiences and co-promotions, which is a very close relationship business.
Some observers say the timing of the leadership shakeup is unfortunate for Netflix, as Amazon is outperforming Netflix through its own ad sales efforts launched last year.
Amazon has a larger ad-supported audience, broader sports coverage, and lower ad prices than Netflix. It also has a broad portfolio, including Twitch and Wondery, that advertisers can use to expand their ad buys, and the ability to tie advertising to sales.
