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State of the Screens

Netflix and Facebook seem to share a crucial thesis about the future of TV shows

By March 26, 2018No Comments

Both Facebook and Netflix are currently funding their video ambitions with a single revenue model (subscriptions or advertising) as opposed to the dual revenue model followed by broadcast/cable networks and other streaming competitors such as Hulu and YouTube.

Facebook believes that it can offer a revenue split with content creators that will incentivize them to produce quality video without a large upfront guarantee.

This is where the market dynamics of addressable advertising kick in. Let’s assume the following:
1) Addressable Video CPM $ (cost for 1,000 impressions) — $100
2) Non-Addressable Video CPM $ — $25
3) Revenue Share — 70% for publisher and 30% for Facebook

The Facebook portion of the CPM $ ($30) could be greater than what the publisher currently charges without targeting. This is solely due to advertisers willingness to pay more to reach the intended target.

Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.