Preparing for Netflix Advertising Campaigns

In the face of waning growth and stiff competition from other platforms, streaming giant Netflix has just kicked off its latest strategy to bring in new users: an ad-supported subscription tier that is significantly cheaper than its traditional monthly membership. In other words, audiences can save on streaming costs by watching advertisements.

But what does this new strategy mean for you as an advertiser? It clearly presents a pretty big opportunity: Netflix has a massive audience and hosts some of the world’s most popular shows and films. But there are also other factors that come into play, like the cost of advertising and the ramifications of introducing ads to a service where none existed before. Now, let’s demystify Netflix ads to help you decide if it will be a beneficial marketing avenue for your brand and if so, how to make the most of it. 

Marketing on Netflix

Let’s start with the basics to understand what exactly Netflix’s new ad-supported subscription looks like. 

Here in the US, “Basic with Ads” will cost just $6.99/month and provide access to much of the streamer’s content (the few exclusions being due to licensing restrictions). In terms of ads, users can expect to see 4-5 minutes of ads per hour, with each ad lasting between 15 and 30 seconds. 

For advertisers, Netflix sums up the appeal of its new offer pretty well in its press release: 

“Basic with Ads represents an exciting opportunity for advertisers—the chance to reach a diverse audience, including younger viewers who increasingly don’t watch linear TV, in a premium environment with a seamless, high-resolution ads experience.”

In addition to providing access to its previously untapped audience, Netflix is offering a couple of other capabilities, including advertiser controls, which not only allow brands to target certain demographics and locations, but also to tailor the type of content their ads appear in. For example, you may not want to advertise a family campsite in the middle of a horror film like The Blair Witch Project, or with any R-rated content for that matter.  

Some other notable insights about the new offering are that ads will run through a third party— Xander DSP—via a partnership with Microsoft, and audience measurement metrics will be offered by Nielsen starting in 2023.

Countries with Netflix Ads

As of November 2022, the new tier, called “Basic with Ads” will be active in 12 countries: 

Pros & Cons of Advertising on Netflix

Now that we’ve covered what Netflix has revealed about its new ad-enabled offering, let’s look at the pros and cons from an advertiser’s perspective. 

Pros of Netflix Ads

• In the US and Canada alone, Netflix currently counts over 73 million subscribers (and let’s not forget that each account typically represents more than one person). So an obvious pro is that advertisers will be able to access Netflix’s massive audience, which is largely untapped—even by other ad-supported OTT and CTV platforms. 
• Advertisers can target specific audiences with their ads and leverage the data from OTT streaming to fine-tune their marketing campaigns and strategies.
• Netflix is home to many of the most popular shows and movies, including big trenders like Squid Game, Bridgerton, and Stranger Things. This gives advertisers a reliable avenue for rapidly getting their products or services in front of millions of consumers’ eyes. 
• With a limit of 4-5 minutes of ads per hour of content, your Netflix ads will have less competition than regular TV, which has 15 minutes of ads per hour. Your brand could therefore have a bigger chance of standing out.

Cons of Netflix Ads

• One of the major questions about Netflix advertising campaigns is how audiences will receive them. Netflix’s streaming service has been around for 15 years without ads. Now viewers are being made to choose between a more expensive ad-free option and a cheaper ad-supported option. This risks putting people off and potentially even alienating subscribers.
• It is unclear how many existing subscribers will immediately switch over to Netflix’s cheaper subscription tier and how many new viewers will sign up. It could therefore be beneficial to wait and see how the first months go before investing in advertising. For example, it took HBO Max eight months for its ad-supported audience to reach 30% of its total subscribers.
• There are indications that the cost of advertising on Netflix will be expensive compared to other OTT and CTV streamers. According to the Wall Street Journal, Netflix has quoted around $65 per 1,000 viewers (CPM), while the typical range for CTV ads is $35 to $65 CPM. 

A Deeper Dive into Netflix Ad Campaign Strategy

One of the first things to consider when attempting to get the most out of Netflix advertising is that viewers are opting into Netflix’s lower-cost subscription tier. This already gives you some indication of the audience you are reaching: they are cost conscious. If you are looking to sell luxury products and premium services, Netflix ads may not be your best option. Instead, highlight competitively priced products, exclusive offers, and budget-friendly services. 

It is also worthwhile to keep in mind that Netflix’s audience is a young one, many of whom don’t engage with traditional linear TV. Use this knowledge, as well as the ability to direct ads to certain genres of content, to come up with unique ads for Netflix viewers. 

Another important strategy for Netflix and all OTT advertising is to make the viewing experience as seamless as possible. By developing ads that match the caliber and quality of the content they are appearing in, you can get more viewers on board with your brand. In other words, the better your ads, the less intrusive they will be and the better they’ll be received. 

Finally, Netflix ads will be brief by design: take advantage of that by creating punchy and dynamic ads that draw the viewer in. This goes hand-in-hand with quality: short, catchy clips that announce your brand and its value—all while delighting the viewer. 

A Whole New Audience 

Ultimately, Netflix advertising campaigns are a big win for companies that have been knocking at the streaming giant’s door for years. It’s a whole new audience. And with a new audience comes new revenue opportunities. 

We’ll be watching closely to see how Netflix’s new offer is received and how its new subscription tier grows. And who knows, maybe we’ll catch a glimpse of one of your brand’s ads onscreen.