Netflix Rolls Out New Ad Buying Opportunities on the Platform

What are your predictions for the future of advertising on streaming platforms like Netflix?

This move by Netflix is a very natural step. It’s worth noting, however, that they aren’t the first in the industry to implement such a solution, as Disney+ had already announced similar plans at the beginning of 2024. Nevertheless, due to Netflix's dominance in many markets and its extensive partnerships, they are ushering streaming into a new advertising era. According to eMarketer data from June 2024, Netflix accounts for up to 7.3% of the time that U.S. adult internet users spend online, yet it only captures 0.3% of advertising budgets. In comparison, other major companies such as:

• Meta (Facebook and Instagram): 7.5% of time spent and a whopping 21.3% of ad budgets
• Google (YouTube): 7.4% of time spent online and 5.6% of the advertising market.

With Netflix investing increasingly in new productions, they need to find new ways to monetize their services to aid in further development. On the other hand, to remain competitive in the market, they cannot consistently raise subscription prices for users. For now, Netflix offers advertising space outside of Europe, but I wouldn’t be surprised if by 2025, they significantly expand their portfolio to other parts of the world. This expansion is also driven by advertisers who will want to introduce ads in other markets.

The solution offered by Netflix will undoubtedly open up many possibilities for unconventional formats (even more so than video ads before a film), such as rich media creations in apps or series sponsorships targeting users watching specific movies or shows. I’m confident that within 2-3 years, all streaming platforms will provide ad-supported packages and integration with key programmatic market players like Google Marketing Platform or The Trade Desk.

The opportunities provided by Netflix will certainly attract the attention of advertisers, who will be compelled to analyze and compare these offerings with other video formats. However, I am convinced that within 12-24 months, Netflix will become a must-have in media plans for the largest brands.

Advertising a brand before one of Netflix’s most popular series sounds like a dream, but what risks might be involved?

Naturally, every advertiser will be interested in airing ads before the most popular titles in Netflix's portfolio (e.g., new seasons of "Squid Game," "Stranger Things," "Wednesday," or "Bridgerton"). The key, however, will be appropriate creative execution and messaging tailored to the fan base of the series. The biggest risk for a brand would be inefficient budget spending due to a mismatch between the ad content and the medium in which it is displayed. Netflix not only enabled the purchase of ads through programmatic tools like Display & Video 360, but also integrated its ad system with companies such as Nielsen for precise measurement of ad effectiveness, and with companies like Snowflake and LiveRamp for secure user data management.

The risk, therefore, lies in not fully utilizing the potential of these technologies. Additionally, if brands decide to place ads before a Netflix film that is not well received by viewers, they may also expose themselves to negative associations with their brand.

How might Netflix’s advertising model affect the quality of content and the user experience?

For now, it looks very promising. If Netflix, together with media agencies, can quickly convince major brands to engage in unconventional campaigns, I believe they will quickly secure a place in media plans, and with a significant share of clients' budgets.

As for the user experience: the ad-supported package is about 40% cheaper than the cheapest package currently offered by Netflix, so for many users, this will be a satisfactory compromise. Besides the price, well-personalized advertising could be a positive change. However, the interruption of content or episodes by ads will certainly have a negative impact on user satisfaction. But by opting for a lower-priced package, users must also accept such compromises...

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