Do I Need to Start Advertising on Netflix?
Updated: Oct 25, 2022
Streaming; Not that long ago you could have mistaken it for an outdoor sport. But with OTT advertising shifting to the top area of digital ad spending for the second year in a row, and far eclipsing traditional TV, it’s become clear that the new age of digital TV has arrived, and with it on of the most effective forms of advertising available.
And on November 6th, Netflix will be wading into the OTT pond. Once the only service around, the streaming giant is hoping to woo back customers and reverse abysmal trends over the last two quarters by offering a new, ad-supported plan at $6.99 a month. It’ll be called “Basic With Ads” and will feature an average of 4-5 minutes of video ads per hour, usually airing at the beginning of your program.
The announcement has certainly made waves around social media, but many marketing directors and small businesses are wondering what this means for them. Is Netflix the next slice of the marketing pie to factor into my annual budgets? Is it worth the investment? And how is it any different from other OTT and streaming ads I’m already doing?
Here’s the breakdown:
At least initially, Netflix has restricted their ad inventory to all but the largest of companies. They’re requiring a minimum base spend of $20 million to unlock access to the platform. However, ad agencies like Wheeler Digital are often able to buy all of their clients’ ads as a group, allowing smaller businesses access to the service at a much lower cost – just like we do with Amazon Premium ads.
But even if we were able to get past that cost-prohibitive minimum, there are several other factors you should be aware of before trying to place your ads on Netflix:
1. Their ads are selling at a $130 CPM Hard Cost. You read that right. Whereas other OTT streaming platforms that Wheeler offers have CPMs between $25-60, Netflix is expecting a hard cost of more than double its competitors!
2. Even with that premium cost, targeting will be severely restricted, nowhere near the hyper-targeting of demographics and behaviors that other OTT platforms offer. Netflix ads will only be broadly targeted by country and programming genres like action, drama, romance. Though Gender will probably be allowed some time in the future. This allows for potentially huge waste of ads being delivered to users who are unlikely to be interested in your services.
3. And finally, there will be no third-party measurement software allowed at the outset. This is crucial. Junk clicks, bots, and spam are massive issues for the digital ad industry, leading to millions of ad dollars wasted every year due to fraudulent activity. That’s why Wheeler uses DoubleVerify on every, single one of our ad campaigns to prevent those scenarios. There’s a chance that DV will be allowed to inspect Netflix inventory sometime in 2023, but as of right now, you just have to hope your ads aren’t being hijacked.
Don’t sleep on Netflix yet. The streaming giant still has the ability to turn around its negative trends and become king of the OTT hill. And there’s a very good chance they’ll begin making some changes to their ad platform after the initial rollout and improving the experience for viewers and advertisers alike.
That’s why Wheeler will continue to monitor their rollout and wait to see if they will lower its cost, improve its targeting and allow third-party measurement. But until then, you may want to skip the Netflix ads for another platform.