Netflix Ads will not be coming until 2023
Today it was confirmed that Netflix won’t get ads until 2023. (July 19). At the end of June, Ted Sarandos, co-CEO of Netflix, said that the company was certainly going to introduce an ad-supported membership tier, but he did not provide a timeframe for its introduction. But according to reports based on stolen internal Netflix conversations, it won’t happen until 2022. If that was the original intention, it has already been delayed; the business now plans to introduce the ad tier at the beginning of 2023.
The partnership between Netflix and Microsoft to supply the platform for platform-based advertising was previously announced. While some speculate that they may end up doing more, Microsoft was referred to as “Netflix’s technology and sales partner.” The story was confirmed by Netflix officials in the company’s investor report (opens in new tab), which stated that the streaming juggernaut had shed over 970,000 customers from January 1 through June 30 of this year.
The report provides specifics on the tier’s anticipated introduction, noting: “We recently announced Microsoft as our technology and sales partner, and we’re targeting to launch this tier around the early part of 2023.” They are investing heavily to expand their multi-billion advertising business into premium television video, and we are thrilled to be working with such a strong global partner.
Netflix continued by stating that they will be focusing on “premium CPMs from brand advertisers” and that the tier will “likely start in a handful of markets where advertising spend is significant.” Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering. So, our advertising business in a few years will likely look quite different than what it looked like on day one.
Cost per thousand impressions, or CPM, is a marketing term used to describe the price an advertiser pays for every thousand times their ad appears on a web page. For instance, if a website publisher charges $2 per CPM, an advertiser will be required to pay $2 for every 1,000 impressions of their advertisement. The average CPM for Google is close to $2.80, but this comment seems to imply that Netflix will aim to charge more. It’s not a completely original concept for a subscription service to provide a lower-priced, ad-supported tier. Hulu, HBO Max, Paramount Plus, and Peacock already provide it, and Disney Plus will as well this year. However, it appears like Netflix is already attempting to carve out a niche for itself.
The ad-supported tier will be created with an “innovation-oriented mindset,” said Greg Peters, the chief financial officer of Netflix, to investors. He added, “It’s a crawl-walk-run model.” At the beginning, it’ll be what you’re familiar with, but over time, we think there’s a tremendous opportunity to leverage the innovation DNA we have. The scale of our offering and the partners we’ve got lined up meant we had to deliver something that’s fundamentally different from linear television. Brands have wanted to connect with Netflix’s content. “