Streaming platforms are a big business, having replaced TV for a large portion of the population. One of the biggest streaming giants, Netflix, has switched over to an ad-friendly subscription tier despite having been all-in on paid streaming. Let’s look deeper into the world of Netflix advertising.

Learn all about the ins and outs of why the company adopted this promotion strategy and how to advertise on Netflix.

Why Does Netflix Have Ads Now?

Netflix advertising tier is available to users as a low-cost alternative to the subscription service. This offers a higher range of subscription options alongside the ad-free tiers with other Netflix plans. This low-cost tier charges $6.99 as of 2024.

The ad-free tier does, however, have a more extensive catalogue. Some shows will be paywalled so it’s best to do your research before opting for this subscription as some of the content from the premium plan might not be available.

So, is Netflix with ads worth it for users? If you don’t mind ads that pop up periodically every 5 to 10 minutes, it can be. It provides a large section of the the same shows with an extensive catalogue for a reduced price. However, it can lack shareability across devices and has limited user profiles, unlike the premium account option.

Netflix advertising campaigns can be worthwhile for certain companies as they have a giant mass-market of interested consumers who are actively engaging with the platform. However, you will only have access to a small slice of their legacy consumers since not everyone is switching over to the ad-based model.

How Many Ads Are on Netflix?

The advertised tier plays ads every 5 to 10 minutes. This may be excessive for many users so they can always upgrade to an ad-free version. Ads can be broken down into two categories:

• Pre-roll Ads: These advertisements are shown before a program or movie starts, much like the commercials seen on traditional linear television.
• Mid-roll Ads: These ads are displayed during the program itself and are usually placed during natural pauses in the content.

How Long Are the Ads on Netflix?

Ads on Netflix include pre and midroll ads that run for about 30 seconds per ad spot. These ads are unskippable and cannot be reminded or fast-forwarded. You can pause them, however.

How to Advertise on Netflix

The easiest way to advertise on Netflix is to use the Netflix ads manager, which is powered by Microsoft. If this is not an option, you may want to partner with an agency that can handle this side of things.

Streaming agencies like Tinuiti can help you navigate any red tape and complexities that come with Netflix advertising. They can also help provide valuable streaming data since viewers can be spread across multiple platforms. The insider information they have can help you build a powerful advertising strategy that will work.

Another advantage of letting a company or streaming specialist handle this is that they can provide better negotiating power. Since agencies are adept in this field, they can leverage their know-how of the landscape and deliver more favourable terms for other companies. This is handy as advertising on Netflix can cost quite a lot.

Advertising Rates

Netflix’s initial advertising rates were notably higher than industry standards. The company proposed a cost per thousand impressions (CPM) of $60 for a Netflix ad campaign. This is significantly above the typical $20 to $30 CPM range for most ad-supported streaming services. However, some industry insiders suggest that Netflix may have ultimately negotiated deals at a more competitive rate, potentially around $50 CPM or lower.

This pricing strategy reflects Netflix’s position as a premium streaming platform with a large, engaged audience. By setting higher initial rates, Netflix aims to position its ad inventory as a valuable commodity for marketers seeking to reach a desirable demographic. The company’s approach also indicates its confidence in the effectiveness of its advertising platform and the quality of its content.

Are the Ads worth it?

Despite the higher rates, some advertisers may have been willing to pay a premium to be among the first to access Netflix’s audience through this new advertising channel. This early adoption could provide valuable insights and potential competitive advantages for these marketers.

It’s worth noting that as the ad-supported tier matures and more data becomes available on its performance, Netflix may adjust its pricing strategy to align more closely with market expectations and competitor offerings. The company’s ability to maintain premium rates will likely depend on the effectiveness of its ad-targeting capabilities and the engagement levels of its ad-supported audience.

Netflix ad revenue data indicates that the company is earning more than any other streamer. Overall, including all tiers the company’s revenue is slated to reach $1 billion in 2024. Apparently, they are also planning to introduce QR codes into their ads, allowing for more engagement.

For the company, it feels like a good win-win strategy. If Netflix is phased out of its ad-free basic plan they will still have their original audience of paying subscribers. There appears to be little downside to providing a cheaper option.