“It’s just too expensive”: Netflix ads one year after launch

A year on from the launch of Netflix’s ad-supported plan and the streaming platform is promising advertisers better measurement, amongst a number of new “enhancements”.

In a global announcement, Netflix president of advertising, Amy Reinhard, celebrated the progress that had been made one year into Netflix’s advertising venture, placing the ad-tier at 15 million monthly active users.

“Our goal isn’t just to offer the same products and tools the industry has come to expect — although we’ve made a lot of progress on that front over the last year. It’s to build something bigger and better than what exists today,” she wrote.

Netflix has been making a concerted effort improve the experience for advertisers, having partnered with Microsoft Advertising to introduce a number of new measurement capabilities and improved ad products and features in its first year of operation.

Reinhard detailed partnerships with third-party verification platforms like Integral Ad Science and DoubleVerify, alongside the expansion of ad lengths to include 10, 20 and 60 seconds, and enhanced user experience.

However, according to Carat Australia group investment director, Frank Carlino, the streamer still has a long way to go if it is to be competitive with other video on demand (VOD) platforms.

Delivery, price and experience were all key factors on which Netflix fell behind the advertising products from other streaming video on demand (SVOD) and broadcast video on demand (BVOD) players, according to Carlino.

Initially, Netflix struggled out the door with its ad-tier, failing to deliver on the impressions it had promised before finally finding its groove ahead of its Q1 financials months.

But the inflated price point that Netflix has pitched itself continues to be a significant point of  issue for media buyers, Carlino told Mumbrella.

On cost per thousand impression, Netflix has been charging around 30% more than Foxtel’s SVOD platform Binge, and around double that of what is being offered by the BVOD platforms, like 10Play, 9Now and 7Plus.

“They price themselves very very high compared to everyone else,” Carlino said. “When you’ve got a performance client and you’re looking at cost per thousand, its just not an appealing option. It’s just too expensive, right?”

He also noted that despite the streamer’s efforts so far, Netflix “still needs to work” on its “ad load content experience” if it is to compete with the likes of Binge in Australia.

But all of this could potentially be turned around by one of the streamer’s more interesting advertising product innovations, sponsorships.

Already launched in the US, and set to rollout globally in 2024, the sponsorships offering will allow advertising to partner with popular programs exclusive to the Netflix ecosystem. There has also been the foreshadowing of a potential investment in live events, as Netflix prepares to host its first ever live sporting event, The Netflix Cup, in the US on 14 November.

For Carlino, this is a step in the right direction, with sports being the premium product would make Netflix ads that much more appealing for advertisers.

“Sport drives massive audience here in Australian, so if there’s something where sporting content or live content was placed on Netflix, I think that would be more appealing and possibly generate greater eyeballs as well.”

“There’s something there, especially off the back of the writers strike. There’s not an abundance of new content, but sports always gonna be there,” he continued. “So if I was Netflix I’d be looking at putting pen to paper on some sort of sport deal.”

Netflix Australia declined to comment.


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