During its recent upfront event, Netflix put the spotlight on its ad-tier subscription, which was launched in November of last year. The streaming service revealed some key information about the subscription and unveiled new advertising opportunities.
For the first time, Netflix disclosed that over 5 million monthly active users have subscribed to the ad-tier, which offers a lower cost in exchange for watching ads. Greg Peters, co-CEO of Netflix, stated that approximately 25% of new signups are opting for the ad-supported option. Notably, around 70% of these subscribers fall within the age range of 18 to 49.
Netflix also announced the introduction of new advertising products. Peter Naylor, VP of global ad sales, shared that upfront partners will be able to sponsor new shows on users’ title screens with a “brought to you by” message. Additionally, larger sponsorships will be featured on Netflix’s home page. Brands will have access to insights about the top 10 most-watched shows and films on Netflix each day, helping them target their media placements more effectively.
In the early stages of incorporating ads, Netflix has primarily focused on targeting based on age, gender, and location. During the upfront, Netflix utilized data from Nielsen, a reaccredited measurement group, multiple times. They highlighted their viewers’ engagement levels and claimed to have a greater reach with an average of two hours of watch time compared to other platforms with just one minute.
To further enhance their partnership with Nielsen, Netflix announced the upcoming launch of a Digital Ads Rating tool. This tool will enable brands to measure the reach and frequency of their ads, starting in the fourth quarter. Netflix also revealed a collaboration with the attribution measurement platform EDO. This partnership aims to provide brands with insights into how ads drive action among viewers.
Peter Naylor emphasized that early results from the partnership with EDO indicate that viewers are four times more likely to respond to a Netflix ad compared to ads on other platforms.
Netflix had originally planned to present its ad pitch to media buyers at the Paris Theater, but the event was unexpectedly moved online just one week prior. While the reason for the change remains unconfirmed, reports suggest it was due to the ongoing Writers Guild of America strike. Surprisingly, Netflix did not mention the strike during the upfront, distinguishing itself from other presenters who addressed the issue. Greg Peters acknowledged the unexpected circumstances at the beginning of the presentation, emphasizing the importance of adapting to a dynamic world.
Netflix provided insights into its ad-tier subscription, introduced new ad formats, and emphasized its commitment to measuring ad effectiveness. With these developments, Netflix is aiming to offer a compelling advertising platform to brands and provide a more personalized viewing experience for its subscribers.
