The streaming giant has been pitching advertisers a November release with aggressive pricing, according to advertisers reported by Netflix. Netflix is competing for ad dollars with a growing number of competitors, including Disney’s upcoming ad-supported version of Disney+, NBCUniversal’s Peacock, Hulu, Amazon and Warner Bros. Discovery.
AdAge reported that Netflix expects the ad-supported tier to generate 500,000 subscribers by the end of the year compared to its 220 million total subscribers.
“We’re still in the early days of deciding how to launch a lower-priced ad-supported level, and no decisions have been made,” a Netflix spokesperson said of launching an ad-supported level. “So this is all just speculation at this point.”
Here’s everything we know about Netflix’s advertising plans.
Netflix leans on Microsoft to sell ads
Netflix recently hired Snap’s former top ad sales executives to form its advertising team. Jeremi Gorman will serve as president of worldwide advertising and Peter Naylor will serve as vice president of advertising sales.
Advertisers have been told they can buy Netflix ads through Xandr’s demand-side platform, the adtech firm’s tool that buys programmatic ads for sellers, an adtech executive briefed by Microsoft said. They will be able to set up programmatic advertising campaigns with guaranteed prices and placements. For advertisers that don’t use the Xandr DSP, Netflix will offer insertion orders, a more traditional way of buying TV ads. In both cases, the ads will ultimately be sold by Netflix, not Microsoft, the executive said.
Netflix seeks better advertising prices
Netflix is asking for CPM (the cost to reach 1,000 people) between $60 and $65, according to advertisers who heard Netflix’s pitch. That would make Netflix one of the most expensive streaming TV options for marketers, slightly ahead of HBO Max’s launch last year.
Advertisers said they expect prices to drop once Netflix’s ad-supported tier launches, as has been typical with other streaming services like NBCUniversal’s Peacock. Netflix is also asking ad agencies for one-year commitments ranging from $10 million to $20 million, depending on the size of the agency, similar to initial deals, according to sources.
Netflix is also asking advertisers to quickly engage. Two advertisers said that Netflix solicited bids for the week of September 5, which coincides with Labor Day. Other sources said he was looking to approve advertisers before September 30. Netflix is seeking names of potential buyers and a general understanding of how advertisers spread their budgets throughout the year, suggesting that Netflix is targeting the biggest TV spenders.
Netflix will have fewer ads than its competitors
Streamers typically offer advertisers lighter ad loads than traditional TV for a better viewing experience, and Netflix similarly offers advertisers four minutes of ads per hour of TV watched, on par with HBO Max and a just under Peacock’s five minutes of time, the briefed executive said.
Netflix is also looking to differentiate itself with tools that limit the number of ads people see to one ad every hour with a maximum of three ads per day, the executive said.
Advertisers say Netflix will be picky about ads
Netflix only allows a handful of big brands as launch advertisers and plans to vet every ad for high-quality messaging and creative, the executive told by Netflix said.
Netflix has long worked with big brands like Coca-Cola and GMC to integrate product placements into shows like “Stranger Things” and “Queer Eye.” It is promoting such partnerships to advertisers and their ability to make their ads, the executive said.
Advertisers want data and measurements
Netflix is offering advertisers the ability to target ads by genre, country and Netflix’s own daily ranking of the top 10 shows, while looking to add more specific parameters such as age, gender, content rating and time of viewing. day in the future, said the Executive informed by Netflix.
One area advertisers say Netflix lacks is measurement. Netflix does not provide advertisers with statistics or third-party data that examines audience size, at least not initially. Metrics like attribution that track what people do after seeing an ad are also not offered. Such data has become standard in how advertisers measure performance and vet streaming platforms.
“They are demanding rather than selling,” an ad buyer previously told Insider. “They’re new to all of this.”