Netflix’s ad-supported tier almost 12 months on: what advertisers need to know

Sep 12th, 2023

In November 2022, Netflix launched a new ad-supported tier for their subscribers. This tier provides a cheaper option for customers to enjoy the same Netflix platform as traditional subscribers, but with ads dispersed into the videos.

10 months following the launch, let’s take a look at the success of the platform so far, and the benefits advertisers using the platform have seen.

Six months following the launch, Netflix’s new tier hit 5 million global users – and this doesn’t seem to be slowing down, with Netflix stating that 25% of all its new subscribers opt for the new-ad tier.

This year, Netflix is projected to generate $561 million in advertising revenue, and this number is estimated to reach nearly $4 billion by 2030.

While this has clearly been a successful endeavour for Netflix, are marketers getting similar benefits for advertising on the platform?

70% of the subscribers on the ad-supported tier are aged between 18-49 years old (median: 34 years) – giving advertisers access to a vast and highly sought after target audience. Research has also found that users are more than 4x as likely to engage with a Netflix ad in comparison to ads on another streaming service, and over 4.5x more likely compared to regular TV.

As the tier evolves, Netflix have announced plans to offer additional opportunities to marketers and advertisers using their platform, including:

  • Sponsoring popular TV series during their launch
  • Associating ads with public holidays, and other streaming categories or genres
  • Align ads with the platforms ‘Top 10’ feature, guaranteeing their ads will appear amongst the most popular shows on the platform.

Currently, Netflix’s advertising opportunities are only available to marketers who are willing to commit a minimum of $10 million for use of their advertising platform. This means that, at the time of writing, the opportunity to advertise on Netflix is only accessible to large organisations with huge advertising budgets.

With the substantial success Netflix have seen on their ad-supported tier in the first year of launch, it is possible that they may alter packages to provide more affordable options for small and medium sized businesses to make use of their advertising services in the future. At the time of writing, however, no such changes to the ad-supported tier have been discussed.

Netflix’s decision to provide users with a more affordable ad supported tier has been hugely successful for the platform – with over 5 million new subscribers in the first 6 months, and financial projections in the billions.

Advertisers who have the budget to advertise on the platform are seeing several benefits – from access to a highly sought after audience, to increased likelihood of ad engagement. As the platform continues to grow and evolve, marketers are hoping to see opportunities arise for companies with smaller advertising budgets, so that they might also have access to the same benefits.

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