Netflix is expanding its advertising business offering new ad formats for brands.
“This is a $180 billion opportunity. When you think about linear TV, you think about connected TV, not including YouTube, not including China and Russia. And we think we’re in a great position to win some of those dollars,” said Greg Peters, co-chief executive officer at Netflix, during an earnings call. “We’ve got great content. The brands want to be next to. We’re a safe place for brands to exist. We got great engagement from our members.”
To bring brands into its network, Netflix has created a number of ad formats including the ability for a brand to be a title sponsor of a show or season. Frito Lay’s Smartfood is the first brand to sign on as the title sponsor for the upcoming season of Love Is Blind.
Additionally, Netflix has created a “Binge” ad format which will allow subscribers to watch an ad in between episodes in exchange for being able to binge episodes uninterrupted. Additionally, Netflix is launching ad spots for its live events, allowing brands to integrate ads within the broadcast of live sports including PGA games and F1.
The ad-supported model is taking off with consumers, many of whom are willing to subscribe to this tier to save on subscription fees, after prices have increased and the streamer has cracked down on password sharing.
In Q3 2023, Netflix grew its ad plan membership 70% over last quarter. “That’s on top of the last quarter where we grew at 100% quarter to quarter,” said Peters.
“We now have 30% of our new sign-ups choosing our ads plan in our ads countries,” he continued. “And we’ve done it by making the ads offering more competitive. We’ve gotten to over 95% content period with our non-ads plans.”
The next big priority for Netflix will be delivering features and products that advertisers want,” added Peters.
“We’ve heard again and again –I’ve heard it this week Ad Week from advertisers– [on] top of that list is measurement,” he said. “We’ve launched our measurement partnership with Nielsen in the United States this month in October. So, we’re excited about that. We’ve got a long list of other partners across other countries that we’ve got to deliver that same capability in.”
In addition, Netflix is working with Microsoft to allow more ways for brands to buy its inventory programmatically.