Netflix’s ad-supported tier is fast becoming a reality, a prospect exciting for both viewers and advertisers alike.
The company has brought the launch up to November 2023 to get ahead of the launch of Disney+’s ad-supported tier that will be offered come December.
For Netflix subscribers, this comes as a huge win, as the platform’s price has steadily rose over the years and this will bring the price back to the range of when they first started their monthly costs at $7-$9/month. For comparison, the current price for the basic subscription is $15.49.
Because of this, Netflix is expecting the ad-supported tier to generate 500,000 subscribers by the end of the year compared to its 220 million total subscribers.
And of course this isn’t just a win for viewers but for advertisers as well.
Netflix’s advertising partner, Microsoft Xandr, will lead the charge with advertisers who will be able to purchase ads through Xandr’s demand-side platform, the adtech firm's tool that buys programmatic ads for marketers. Though there will still be an option to purchase insertion ads, the more traditional route of buying placements.
A $60-65 CPM has been set for the point of launch so advertisers will need to understand the value this platform is making on their business and marketing strategies as they begin to enter this space.
And speaking of value, Netflix is viewing the engagement the same way, as they plan to invest the new revenue strategy back into their content as demand grows.
Netflix currently ranks fourth place in terms of total projected 2022 spending on content. And when sports are removed from the equation, it shoots up to second place. The investment they are putting into their in-house projects exhibits why Wells Fargo predicts the platform will spend $19 billion on content in 2022, up 13% from 2021.
With Netflix investing more in their productions, offering more options to subscribers, and widening the pool for growth, advertisers can begin to see how their own investment in the platform will pay off as well.
But as they kick off with advertising, there will be a moment of pause in data and attribution. Netflix will be gathering their own information and figuring out the best way to send information back to the advertiser so the launch may not offer much for advertisers by way of audience insights or engagement.
Whether you decide to jump in right off the bat or not won’t be an issue though for Netflix. We anticipate the ad-supported tier to be a success and evolution of the offering to come quickly.
If or when you do decide to jump into an engagement with Netflix, we expect there will be some exciting learnings from the vast audience of subscribers that flock to their content.