Netflix (NFLX) is making a bold move by announcing the launch of its in-house advertising technology platform, set to be available by the end of 2025. This platform aims to revolutionize the advertising landscape, offering advertisers innovative ways to purchase ads, gain new insights, and measure their impact effectively. The announcement marks a significant shift in Netflix’s approach to advertising and positions the streaming giant as a formidable player in the ad tech industry.

Expanding Buying Capabilities

Starting this summer, Netflix plans to broaden its buying capabilities. The company will integrate with The Trade Desk (TTD), Google’s (GOOGL) Display & Video 360, and Magnite (MGNI), adding these platforms alongside its existing partnership with Microsoft (MSFT). This strategic expansion will provide advertisers with a diverse range of programmatic partners, enhancing the flexibility and reach of their campaigns.

The Role of Programmatic Partners

The inclusion of The Trade Desk, Google’s Display & Video 360, and Magnite signifies Netflix’s commitment to offering a robust and versatile advertising ecosystem. These partnerships will enable advertisers to tap into advanced targeting and analytics tools, maximizing the efficiency and effectiveness of their ad spend.

The Trade Desk (TTD)

The Trade Desk is renowned for its data-driven approach to digital advertising, offering sophisticated tools for audience targeting and performance measurement. By partnering with The Trade Desk, Netflix aims to leverage these capabilities to deliver more personalized and impactful ads to its viewers.

Google’s Display & Video 360

Google’s Display & Video 360 is a comprehensive advertising platform that integrates display, video, and TV advertising. This partnership will allow Netflix to benefit from Google’s extensive reach and advanced analytics, further enhancing the precision and effectiveness of its advertising efforts.

Magnite (MGNI)

Magnite, a leading independent sell-side advertising platform, will play a crucial role in Netflix’s new ad tech ecosystem. With its expertise in programmatic advertising and existing partnerships with major brands, Magnite is well-positioned to drive significant value for Netflix and its advertisers.

Magnite’s Strategic Position

Benchmark analysts have highlighted Magnite’s “odd trading pattern,” acknowledging that headlines have been the primary risk factor and that investors perceive the story as complex. However, they underscore a straightforward fact: Netflix could become Magnite’s largest customer by the end of 2025. This potential growth is a key reason for the firm’s continued Buy rating and $18 price target on Magnite, identifying it as a top investment idea for 2024.

Craig-Hallum’s Optimism

Craig-Hallum has also expressed confidence in Magnite’s prospects, raising its price target from $18 to $20 and maintaining a Buy rating on the shares. The firm points out that Netflix’s decision to move its advertising operations in-house and partner with Magnite, along with The Trade Desk and Google, is a significant validation for Magnite. This partnership, coupled with Magnite’s existing exclusive partnership with Disney (DIS), positions the company to benefit from a substantial number of ad-supported users and solidifies its standing in the ad tech industry.

Magnite (MGNI) Technical Analysis

Price Movement and Moving Averages:

• Observation: The price has sharply increased, surpassing both the 50-day and 200-day moving averages, indicating a strong upward momentum.

Volume:

• Volume: 3,840,900
• Observation: There is a significant increase in trading volume, suggesting strong investor interest and a potential breakout.

Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... More (RSI):

• RSI Value: 75.30
• Observation: The RSI is above 70, indicating that the stock is currently overbought. This might suggest a potential pullback or correction in the near term.

On-Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... More (OBV):

• OBV Value: 55,984,725
• Observation: The OBV is trending upwards, confirming the price increase and indicating that volume is supporting the price movement.

Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... More:

• Stochastic RSI Value: 1.000
• Observation: The Stochastic RSI is at its maximum value of 1.000, which reinforces the overbought condition indicated by the RSI.

Average Directional IndexThe Average Directional Index (ADX) stands as a cornerstone indicator in the toolkit of technical traders, offering insights into the strength of market trends. Developed by Welles... More (ADX):

• ADX Value: 23.58
• Observation: The ADX is below 25, suggesting that the trend strength is moderate. A value above 25 would indicate a stronger trend.

Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... More:

• Chaikin Oscillator Value: -1,432,288
• Observation: The negative value of the Chaikin Oscillator suggests that there might be some bearish divergence, implying potential distribution.

Magnite Inc (MGNI) shows strong upward momentum with significant volume and price action breaking above key moving averages. However, the overbought conditions indicated by RSI and Stochastic RSI suggest caution as there might be a pullback. The ADX indicates a moderate trend strength, and the negative Chaikin Oscillator hints at possible distribution.

Investors should monitor the stock closely for any signs of reversal or continuation of the current trend. Given the overbought conditions, it might be prudent to wait for a pullback before making further investment decisions. Past performance is not an indication of future results. Always conduct your own research before making investment decisions.

Netflix’s Commitment to Ad-Supported Content

Netflix’s move to develop an in-house advertising technology platform underscores its commitment to expanding its ad-supported content offerings. As the largest global streaming company, Netflix’s decision to invest in and prioritize ad-supported initiatives highlights the growing importance of this revenue stream. By integrating with leading ad tech platforms and bringing operations in-house, Netflix aims to provide advertisers with unparalleled tools and insights, enhancing the overall effectiveness of their campaigns.

The Future of Netflix Advertising

With the launch of its in-house advertising technology platform, Netflix is poised to transform the advertising landscape. Advertisers can look forward to new ways to buy, leverage insights, and measure impact, making their campaigns more effective and engaging. As Netflix continues to expand its partnerships and enhance its capabilities, the future of advertising on the platform looks promising.

Insights:

1. Netflix’s new ad-tech platform enhances advertiser capabilities.
2. Magnite may become Netflix’s largest customer by 2025.
3. Craig-Hallum sees strong growth potential for Magnite.

The Essence (80/20)The Origins and Evolution of the 80/20 Principle The Discovery by Vilfredo Pareto In 1897, Italian economist Vilfredo Pareto uncovered a striking pattern in his study of wealth and... More:

Core topics for comprehensive understanding include Netflix’s development of an in-house advertising technology platform and its partnerships with major players like The Trade Desk, Google, and Magnite. These moves aim to provide enhanced advertising capabilities and measurement tools, positioning Netflix as a significant player in the ad-supported streaming market. Magnite’s strengthened relationship with Netflix and its exclusive partnership with Disney are crucial for its growth prospects.

The Action Plan:

1. Monitor the development and launch of Netflix’s in-house ad-tech platform.
2. Evaluate the performance and impact of partnerships with The Trade Desk, Google, and Magnite.
3. Consider investment opportunities in Magnite, given its potential growth and strategic alliances.

Blind Spot:

Potential challenges in the integration and effectiveness of the new ad-tech platform and partnerships could impact the anticipated benefits for both Netflix and its advertising partners.

Looking Ahead

Netflix’s announcement of an in-house advertising technology platform marks a significant milestone in the evolution of digital advertising. By partnering with industry leaders like The Trade Desk, Google, and Magnite, Netflix is set to offer advertisers unprecedented tools and insights. This move not only strengthens Netflix’s position in the ad tech industry but also promises to deliver more impactful and personalized ads to its global audience. As the platform rolls out over the next few years, it will be exciting to see how these changes shape the future of advertising on Netflix.

Netflix Ad Tech Platform FAQ

Book Recommendations:

1. Hooked: How to Build Habit-Forming Products by Nir Eyal.
2. The Attention Merchants: The Epic Scramble to Get Inside Our Heads by Tim Wu.
3. This Is Marketing: You Can’t Be Seen Until You Learn to See by Seth Godin.