Netflix Will Wean Itself Off Microsoft’s Adtech By 2025

Netflix will stop using Microsoft’s adtech to power its digital ad serving, a source familiar with the matter told ADWEEK. Instead, the streaming powerhouse will build its own adtech server which it aims to roll out globally by 2025.

Brands who want to buy ads from Netflix directly will have to use Netflix’s tech, the source continued. Ad servers are tech that manage media buying.

Microsoft will remain a programmatic partner for Netflix, but as a supply-side (SSP) and demand-side platform (DSP)—both enable trading Netflix inventory programmatically—and not as an ad server, the source said. The Trade Desk, Google’s Demand & Video 360 and Magnite will also be new programmatic partners starting this summer.

The streamer announced during the upfronts plans to bring its “adtech in-house,” but further details on what that entails have so far been scant.

The company said it would begin testing its own adtech in Canada this year, launch in the U.S. by the second quarter of 2025 and globally by the end of that year.

Netflix declined to give on the record comment.

“Microsoft Advertising is proud of our work with Netflix since 2022, leveraging our end-to-end technology platforms and global sales teams to quickly build, launch and scale their first ad supported offering globally,” said Kya Sainsbury-Carter, corporate vice president of Microsoft Advertising, in a statement. “We are excited to remain an important programmatic partner going forward.”

Flexibility, control and bespoke ad units

Building ad servers isn’t currently table stakes for streamers, many of whom rely on third parties like Freewheel, said Ross Benes, senior analyst of TV and Streaming at Emarketer. Unique tech could be a point of differentiation.

“When [Netflix] announced they were getting into ads, it made the most sense to build in-house,” Benes added.

Building its own ad server will let also Netflix create bespoke ad units in line with its record for innovating the conventions and technology of television, said Dave Morgan, chairman of TV buying firm Simulmedia.

“They’re going to look for building adtech that is competitively positioned for Netflix to be really successful. That doesn’t mean they’re trying to match what Amazon might do or what YouTube might do,” Morgan added.

And as Netflix’s vp of ad sales Peter Naylor told ADWEEK earlier this week: “Having our ad stack close to home gives us a lot of flexibility in delivering on our clients’ needs.”

Big tech and adtech don’t always gel

When Netflix first said it was partnering with Microsoft on advertising technology in 2022, it raised some eyebrows in the industry for not being the obvious adtech choice.

But dabbling in the convoluted world of adtech is not always fruitful.

Apple shut down its programmatic ad network in 2016 and AT&T never fully integrated Xandr before it sold it to Microsoft.

Netflix is playing catch up with other streamers in terms of ad revenue and audience: It’s projected to generate less than $1 billion from ad sales this year, trailing Peacock, Roku, Hulu and Amazon, per figures from Emarketer.

But Netflix has been a master at the pivot, from DVD subscription service to pure-play subscription TV provider to a company that shows live sports and cracks down on password sharing.

“They’re constantly doing things they said they never would do,” Benes said.