Netflix Working With Advertisers to Develop More Targeted Commercials Including Episodic Formats
Netflix isn’t slowing down one iota on its quest to double down on profits from its ad-supported tier. The service stands to gain hundreds of millions of dollars in additional revenue from its “Standard with Ads” plan in 2023, just months after bringing the new subscription tier to market in November 2022.
New reporting from the Financial Times indicates that Netflix wants to do more to help its advertising partners make the most of the platform. The streamer was a heavy presence at this year’s Cannes Lions festival, making the rounds with advertising agencies to outline its new advertising strategies when its partnership with Microsoft likely ends next year.
Netflix has reportedly been telling advertising executives that it plans to roll out more tailor-made advertisements, which will target viewers of specific shows. The company could also introduce “episodic” ads, that would show a series of similar but distinct commercials based on a central theme for one product. Netflix can leverage its user data to show it which customers have watched what content and give them an ad experience that shows less of the same commercials over and over again.
“They’ll know what you’ve seen,” one ad exec told the Financial Times. “So the old days of making episodic work may be back because before you could never guarantee what people have seen already. Now you can write 15 episodes of an advert and guarantee that the viewer will see them in the right order. So that’s really interesting.”
Representatives from advertisers struck an enthusiastic tone about Netflix’s plans. The ad industry is facing a very soft market nowadays, and considering how much TV broadcasters (and increasingly, streamers) depend on the revenue they provide, media companies are doing everything they can in order to try to help give advertisers a leg up.
“What level of targeting that they start to apply could get really, really interesting,” another advertising rep explained to FT. “We were keen for some of our brands to use it so that we could see what was coming [but] we can’t correlate exposure to Netflix to sales — it’s just too small. But you can get learning about who saw your ads.”
Creating more innovative ads is a good place for Netflix to start. A survey from January found that 70% of streaming users who clicked on an ad for a product purchased that product, demonstrating that innovative and engageable ads do have an effect on customer habits. Netflix has been slowly increasing the number of ads per hour that it shows on its Standard with Ads plan, acclimatizing users slowly to a higher overall exposure to commercials.
The company now makes more money per user from its ad-supported tier than its ad-free plans, which helps explain why it is no longer offering its cheapest ad-free option in Canada. But Netflix’s Standard with Ads still lags behind ad-supported plan Disney+ in terms of new signups, and it will have to do something about that to show advertisers its brand is still the perfect vehicle for selling their products.
Users won’t notice the new advertising techniques on Netflix right away; the company is still using Microsoft to help integrate ads onto its platform, as it wanted to get its ad-supported product to market quickly instead of building its own advertising suite. But Netflix may decide to leave its deal with Microsoft in 2024, and if it does users could start to notice more ads that are specifically tailored to their viewing habits.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.