Netflix Advertising Will Be Expensive

Netflix is seeking a streaming industry-leading $60 CPM, guaranteeing media buyers 500,000 AVOD subscribers at or shortly after launch, according to Ad Age. The Wall Street Journal says the number to reach 1,000 viewers is more like $65 (weeks ago, WSJ said CPMs could “eventually” reach $80). By comparison, Disney+ AVOD has reportedly sold ads on a $50 CPM. WSJ reported that by the end of this month, Netflix wants advertisers to sign up for a year-long commitment that’s similar to what the linear television networks seek during the May upfronts. Ad Age says Netflix wants a $20 million minimum commitment, although WSJ reported that figure as the max. That’s a significant discrepancy, and one that Netflix declined to clarify. “We are still in the early days of deciding how to launch a lower-priced, ad-supported tier and no decisions have been made,” a Netflix spokesperson told IndieWire. “So this is all just speculation at this point.”

Targeting capabilities will be limited on Netflix, especially in the early going; brands won’t even be able to select specific programming. Instead, Netflix will offer advertising packages based on genre, of which it has 20. Earlier this summer at Cannes Lions, co-CEO Ted Sarandos said that the average Netflix user crosses six genres. Packages across Netflix’s “Top 10” will also be offered, per Ad Age. (WSJ noted that the Top 10 package applies to the U.S. only.) Netflix has not yet revealed (to the media or to advertisers) what shows will be available for ads. Advertisers initially can choose 30-second or 60-second ads, according to Ad Age, and a specific commercial cannot stream more than once per hour. The WSJ wrote the ads would be 15 or 30 seconds. Multiple earlier media reports had Netflix capping ads at four minutes each hour. That’s much lighter than the ad load on traditional TV, which typically sees 18-23 minutes of commercial time per hour, according to research firm Kantar. Netflix will not have third-party measurement (like, say, Nielsen) verification, Ad Age reported. Instead, Microsoft’s advertising and analytics subsidiary Xandr platform will provide “impression counts.” Netflix originally targeted the first quarter of 2023 to launch its ad-supported tier, but AVOD Netflix may now come as early as November — as early as November 1, per The Wall Street Journal. Disney+ with commercials will debut December 8, which means Netflix AVOD might beat its rival to market. Netflix is selling ads through Microsoft, its ad partner. On Tuesday, Netflix hired Snap executives Jeremi Gorman and Peter Naylor. Gorman will be president of worldwide advertising, Naylor is vice president of ad sales; both start in September. It’s a good move for them as Snap laid off more than 1,000 employees the following day.