I’ve never been bothered by the envelope ads that Netflix sends out with my DVDs each week, but when it comes to putting ads on their website I’ve never been a fan of the strategy. Netflix has such an amazing website that I’ve found their banner ads really take away from the overall experience of the site. For a long time Netflix resisted the temptation of adding ads to their homepage, but with the heavy demand that they’ve seen for their mailer ads, it was only a matter of time before we saw them to be tempted to monetize the massive amount of traffic that comes to their site each day.I may have been critical of Netflix when they made their foray into banner advertising, but one thing that I love about the company is that they always do plenty of testing with any change to their business model and it appears that banner ads have been no exception. While we haven’t heard any official word on the state of these advertisement experiments, Netflix Fan is reporting that an anonymous source has told her that the ads simply weren’t worth the trouble and that Netflix will begin phasing them out over the next few months.
While the move would likely mean a few less advertising dollars in Netflix’s pockets, I think that this is the right move to make, not just from a consumer perspective, but also from a business perspective. Netfllix’s brand is far too valuable to dilute the goodwill and passion that their customers have for the company by cheapening their experience when they visit the site. Netflix’s website is so great because it is so intuitive and even though it contains a lot of information, it still feels clutter free.
While the results of their study will likely remain sealed even after they pull the program, it would not surprise me to find out that they saw an increase in churn among the population that they’ve targeted with these ads. While overall, I’m sure that the ads could contribute to the bottom line, the incremental benefit of the additional advertisement revenue offset by the consumer dissatisfaction over the move, may have been enough to convince Netflix to pull the program.
It’s always possible that Netflix isn’t really pulling the program or that they could bring it back in the future, but if Netflix Fan’s source is correct, then this is a great move by the company and shows that they know how to listen to their customers and how to respond when changes to their business models aren’t well received.
Davis Freeberg is a technology enthusiast living in the Bay Area. He enjoys writing about movies, music & and the impact that digital technology is having on traditional media. You can read more of his coverage on technology at www.davisfreeberg.com. Davis owns shares of Netflix stock.