In November, Netflix launched its long-anticipated advertising campaign, giving customers in select markets, including the United States, the ability to offset the cost of their Netflix subscription by allowing them to interrupt their viewing with ad breaks. Announced the support layer. At the Consumer Electronics Show in Las Vegas, Netflix’s President of Worldwide Advertising, Jeremi Gorman, provided the first insight into product performance and future plans for streamers.
In an interview at Variety’s Entertainment Summit at CES, the executive said the company is pleased with the advertiser’s selection of debuts and their diversity.
Commenting on the variety of brands participating, Gorman said: “Consumer goods companies, luxury goods companies, automotive companies…[and] retail. We are looking at a wide range. This is also good for the consumer experience, she noted, as viewers aren’t bored with endless car ads. “There’s a lot of variety in advertising, and I think that’s going to continue,” she predicts Gorman.
The interview also touched on early frustrations and concerns about Netflix’s foray into advertising.
Among them is the major backlash the company has received over its high advertising rates, calling for what one industry executive called a “Super Bowl CPM.” However, while Gorman justified the pricing, he admitted that ultimately the market will determine what pricing Netflix can get.
“From a supply and demand standpoint, premium CPM reflects two things. One is that we didn’t get as many advertisers. Secondly, I think the premium content environment in which the ads run guarantees high CPMs.”
Of course, whether Netflix constitutes a “premium environment” is up for debate.
“I think we are certainly humble and fully aware that we are the top of the market. I’ll tell you,” says Gorman.
Another concern with Netflix’s ad-supported services is what content can contain ads. Because the streamer wasn’t set up as an ad-supported service to begin with, many of its content deals didn’t include his AVOD rights (video-on-demand ads). This meant that Netflix had limited ad inventory and could not even advertise on some of its own “Netflix Originals” without the appropriate rights included in the contract.
Gorman also addressed this, saying that Netflix is actively working on the licensing issue.
“As we speak, it’s progressing day by day. We’re renegotiating deals we made a long time ago,” she said, noting that the content people see on a regular basis is a “big deal.” Netflix said about 85% to 95% of its content is available on the ad tier in the meantime, Gorman said.
Second, from a business perspective, offering a lower-cost tier could cannibalize Netflix’s existing subscriptions, as customers fall into cheaper tiers at a faster rate, not offset by growth in the advertising tier. However, Gorman downplayed those concerns by saying that Netflix customers have historically stayed on their current plan.
Unfortunately, executives weren’t able to discuss the adoption of ad-supported products as Netflix is gearing up to announce earnings, but said they were “satisfied with the growth we’re seeing.” rice field.
Netflix ad tiers are currently available in the US, UK, France, Germany, Spain, Italy, Australia, Japan, South Korea, Brazil, Canada and Mexico. The company has no immediate plans to expand, but in the long term it aims to target a larger advertising market. HD) and is limited to streaming from one device. Also, the content cannot be downloaded to your device for offline viewing.
Moving forward, Netflix plans to do a little more than just the typical ads, such as dynamically inserting ads near relevant moments for marketers, or single-show sponsorships. We also plan to allow marketers to target their ads by age and gender.
