It was a red line for years. “No advertising coming onto Netflix. Period,” CEO Reed Hastings said in 2015.
The times change, however, and after years of competition from services like Hulu, HBOMax, Peacock, and Sling, Netflix decided to rethink its model in late 2022. Starting in November, the streaming giant added an ad-supported tier for a discounted price, and with that, a new marketing avenue toward its 230 million subscribers. Here, we break down the basics of Netflix advertising: how it works and how we can make it work for you.
Specs, Frequency, and Targeting
Like other streamers, Netflix runs ads in 15 to 30 second increments, but unlike the competition, they have a strict frequency cap. Subscribers won’t be shown more than four or five minutes of ads per hour. From a customer-experience perspective, this is fantastic news. They won’t be inundated with commercials, pausing their favorite show every few minutes to pitch them products that become increasingly less alluring. Good for customers! But, what’s good for customers can also be good for advertisers. Think about it. In any given hour of viewing, a subscriber could see as few as four commercials. That spotlighting of attention is something other streamers don’t offer, and an ad’s memorability grows as the frequency drops (you’re more likely to remember a commercial if you’ve only seen one in the last 15 minutes). The limited space could yield maximum impact.
Furthermore, Netflix offers targeting options. Advertisers will be able to promote based on genre, country, age group, gender, content rating, and time of day. Additionally, ads can target Netflix’s constantly changing Top 10 in both movies and television. Essentially, an advertiser’s strategy can be highly specific and highly mutable.
A Growing Audience
Right now, ad-tier subscribers only account for about 5% of Netflix customers, but that number is growing. In January, signups for Netflix’s ad-supported tier doubled with positive gains projected throughout the rest of 2023. Despite a surfeit of competitors, Netflix has managed to hold onto its highly-engaged audience while riding wave after wave of market fluctuations. Because the ad tier was released less than a year ago, there is bound to be a transition period as customers become accustomed to the ad model – something that might be a bit slower for Netflix since it has been publicly against ads in the past. The trends are going in the right direction, though, and eventually Netflix aims to have numbers more like its competitor, Hulu, half of whose subscribers choose advertisements. All the while, Netflix continues to add to the overall number of customers. If outlooks hold true, the total amount of Netflix subscribers will eventually reach 500 million. What’s half of that?
C Squared Social and Netflix
C Squared Social is one of the first agencies that can advertise on Netflix. If you are looking to access this highly-exclusive and highly-engaged audience, contact our team of marketing professionals. We will craft a personalized video strategy that will be effectively targeted and help you increase your ROI. With Netflix ads, we will show you how it works and then make it work for you.