Advertising: More Than a Necessary Evil for Entertainment

Rajeev Raman

September 1, 2023

Most consider ads a relatively modern, undesirable phenomenon, but they have existed forever.

The first known written ad was a papyrus in Thebes, Egypt in 3000 BC created by a slaveholder trying to find a runaway slave. The first known billboard was erected in Rome in the 1st Century AD promoting a gladiatorial contest. The printing press in the 15th century took things up a notch with ads starting to subsidize content. And here we are today, some 5,000 years into the roadmap for advertising.

The truth is that advertising can be a powerful tool for creating and delivering entertainment. Advertising can be funny, informative, and even thought-provoking when done well. Product placements, sponsorships, and viral marketing are examples of ads that work. But why is it that for every example that works, there are probably hundreds that don’t? The simple answer is that advertisers struggle to balance reach with targeting. When you emphasize reach, you end up with irrelevance. When you overdo targeting, you end up with spooky.

Now, let’s take a look at the other side. A premium, scripted TV show can cost anywhere from $10,000 - $100,000+ per minute to produce. This means a 10-episode season is likely to cost over $20 Million. Even with Netflix’s premium advertising rates, it would need 450 Million views just to break even. More likely, a show will need close to 1 Billion views to break even. To make matters worse, there aren’t enough premium advertisers like Toyota to fill the billions of streaming views across YouTube, Netflix, Paramount, and others.

Content businesses will have to embrace both business models as the economy swings from good to ok to bad. There is, however, a significant opportunity to step away from the one-size-fits-all plan approach and create highly personalized subscription plans. We can see where this is headed as we work with some of the largest consumer businesses to power innovative, personalized, and dynamic plans. Exciting times ahead!

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