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Is Netflix a Short Term Sell or a Long Term Buy? [View article]
thanks for the comment. Regarding the ad markets, its about segmentation. Google is definitely one barometer but their income draws far less from display advertising then competitors so its an incomplete picture. It's the softness in the display sector at issue here. (That softness has been forecast for a while and can also be seen a little in Yahoo's projections, WPP's, Microsoft's and others).
To throw some numbers at it: Netflix spent more than $69m on display advertising between January and June 2007. Its a big part of SAC costs.
If you look at the mix of top 10 display advertisers back in November, 7 of the top 10 were financial services firms. If you look at the data for Feb '08, it's down to 4 (5 if you include an Auto insurer). Netflix, at the same time, is in the top 10 at number 7.
....Per earnings, their SAC costs were down to the lowest level since going public yet their stake in Display ads was up. That seems to support the argument in my article.