The launch of Netflix's new ad-supported tier is now days away, with its launch set for next week on November 1st in Canada and Mexico and a November 3rd launch in the US, UK, and many other countries they operate within.
In anticipation of the launch, we want to dissect some of the main facts for marketers and, ultimately, what the outlook is from here.
Ad Targeting (Limited)
One of the primary elements marketers will need to keep in mind is the lack of regional targeting available at the point of launch, as Netflix will limit targeting capabilities.
It is anticipated that Netflix will begin incorporating the ability to target regions within Q1 of 2023, so those marketers looking for a more localized solution will have to wait.
Content targeting (i.e. programming) will also be limited at the point of launch, although similar to the geographic limitations, it is anticipated to quickly mature in Q1.
Although these initial restrictions may create some skepticism for some, it is clear that Netflix has closely evaluated the brands that would offer the most significant commercial opportunity for their organization, along with those that will provide "aspirational" moments for other marketers across the globe.
Speaking of creative, Netflix has a deep aspiration to "get this right", and the brand will have a hand in approving each piece of ad creative that will appear on their platform.
This move from Netflix essentially installs an approval gate into their workflow, allowing the brand to pre-approve both marketers and content to be featured to their subscribers.
It's a complete unknown at this point in time how restrictive these measures may be, although this offers an important creative consideration as content rejections may occur.
A 75-second slot will be allocated per commercial segment within Netflix, including a combination of 15 & 30-second spots. The initial indication is that users may see a maximum of four (4) minutes of commercials per hour of programming.
The ads will feature a common approach, with both pre, mid, and post-programming advertisement slots being an option for Netflix to leverage.
For some content formats, namely those created for streaming platforms and movies, the ad placements may come at slightly inopportune times as traditional content breaks have not been incorporated into the content.
While the programming that was initially created for traditional broadcast television (ex. Friends) will feel much more normal for users, as the content has been produced with natural transition periods for commercials.
The User Investment
The ad-supported tier will launch for users at $5.99 in Canada and $6.99 in the US, the hope here being that those who may share an account or do not use Netflix currently will jump on this opportunity and join their subscriber base.
For advertisers, the CPM will start between $65-75 at launch. And though the targeting capabilities are still quite new, the advertisers who jump or have jumped on this opportunity will reach a unique audience. With Netflix already reaching 60-70% of Canadian households, the high price tag will offer a high reward.
This move from Netflix will transform the TV and streaming landscape. Whether your brand decides to jump into this new opportunity or not, it will shake up how and when advertisers are in the market. As more streaming services enable ad-supported options, the seasonality of buying will change, allowing advertisers to place ads on content regardless of season, as releases will happen year-round. Of course, there will still be heavy release times due to production schedules, but the options for advertisers will be much greater.