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Netflix launches ad-supported service, brands face high costs

By Don-Alvin Adegeest

3 Nov 2022

Business

Image: Emily in Paris courtesy of Netflix

Netflix has unveiled its advertising tiers, launching a budget-priced streaming service where users see commercial content of 15 to 30 seconds before and during programming.

With an audience of 200 million subscribers, the opportunity for fashion brands to be seen is enormous, but smaller brands are likely to be priced out, despite Netflix’s wide reach.

Advertising on Netflix is priced higher in comparison to other platforms, with 65 dollars per one thousand impressions (CPM). Compare this to the cost of advertising on Instagram at 6.7 dollars per CPM or Disney + at 50 dollars per CPM, and Netflix is targeting brands with a serious marketing budget.

The obvious question is if Netflix will reveal data concerning subscribers so that brands can target and measure their ads. Luxury companies in particular may not see advertising as advantageous as they would target households with a higher income, and these presumably can afford the higher-priced streaming fee and will not be privy to seeing ads.

In June Netflix stock was down 66 percent from its peak in 2021. The company had been wavering with launching advertising, backtracking on an earlier pledge to avoid ads. Tiered subscriptions and advertising will bring new revenue amid a slowdown in subscription growth. When popular streaming service Hulu launched an ad-supported plan it generated 3.5 billion dollars in advertising revenue from September 2020 – 2021.

MARKETING
NETFLIX