Netflix has closed its second-ever annual Upfront season, where the SVOD giant marked growth compared to last year in commitments for advertising dollars as it continues to build up ad tech capabilities.
“For Netflix’s second year of Upfront negotiations, we closed deals with all major holding companies as well as independent agencies, with a 150% plus increase in upfront ad sales commitments over 2023, in-line with our expectations,” said Netflix President of Advertising Amy Reinhard in a statement, adding that Upfront commitments span investment from all key advertising categories including CPG, tech & entertainment, auto, QSR and retail.
The streamer didn’t disclose a specific dollar amount for Upfront commitments.
Netflix is a newer entrant to the advertising space, having launched a streaming subscription plan with ads in late 2022. As of mid-May, the ad-supported subscription tier had 40 million monthly active users.
Reinhard on Tuesday disclosed some of the activity Netflix saw as it wrapped up the annual Upfront negotiation season for ad sales investment, including partnerships for some of the platform’s top titles and upcoming events. That includes closing agreements for Squid Game, Wednesday, Outer Banks, Happy Gilmore2, Ginny & Georgia, and Love is Blind. Live sporting events, unsurprisingly, also got some love, with Netflix securing deals around its upcoming WWE Raw coverage that kicks off in 2025 and two Christmas Day NFL games.
International brands are also getting on board. Netflix nabbed multiple international on-screen title sponsors for season 3 of its popular Bridgerton TV series, including L’Oreal, Pure Leaf, Amazon Audible, Puig, Booking.com, Stella Artois and Hilton.
L’Oreal is also one of the brands that partnered with Netflix internationally last week for the return of Emily in Paris, along with LVMH, COTY Gucci, Kaiku Caffee Latte, Aeromexico, Google and Rakuten.
As mentioned, Netflix has been working to beef up its capabilities, partners and features for advertisers. That includes building an in-house ad tech platform and ad server, which is slated for beta testing in Canada this November followed by a global launch in 2025.
Earlier this month AdWeek, citing ad buyers who talked to Netflix in July, reported that the streamer continues to lower its ad prices. Per the report, Netflix will charge CPMs (cost per thousand views) between $20-$30 for some of its ad inventory. That compares to the $65 CPM charge it came to market with back in 2022.
It follows reported CPM price drops earlier in the year. In June, after a WSJ report, eMarketer noted the entrance of Amazon Prime Video’s ad tier in January (which in contrast to Netflix’s ad tier, rolled out as the default across Prime Video’s entire subscriber base – providing immediate ad plan scale and meaning users needed to proactively signup for and pay extra to go ad-free) meant more premium streaming ad inventory in the marketplace alongside its move to undercut rivals by asking for about $30 CPMs. That forced Netflix to lower CPM prices to between $29 and $35, per the report.
During Q2 earnings, where Netflix reported revenue and subscriber growth (including ad tier accounting for 45% of signups in the quarter across available countries), executives reiterated that its ad business is new and will take time to grow. It’s already becoming a more meaningful revenue contributor, according to Netflix CFO Spencer Neumann during the earnings call, but with the size of Netflix’s massive subscription business, advertising isn’t expected to become the SVOD’s primary revenue driver for at least the next couple of years. The company expects ad tier subscribers to achieve “critical” scale for advertisers across ads countries in 2025, providing a larger base to attract more ad dollars.
But eyeballs aren’t the only thing advertisers need.
On the measurement front, Netflix has multiple partnerships in the pipeline. In the UK that involves inclusion of Netflix’s ad-supported plan in Barb’s (the UK TV audience and measurement body for advertisers) Advance Campaign Hub in September to help UK advertisers plan campaigns.
For campaign performance measurement, Netflix later this fall is integrating into NielsenOne, Lucid (or Cint), EDO, NCSolutions, Kantar and Affinity Solutions for all buy types.
It’s also making moves to utilize secure and privacy-safe data environments through clean room supplier partnerships with Snowflake, InfoSum and LiveRamp. According to Reinhard’s post Tuesday, the clean rooms enable advertisers to determine audience overlap, post-campaign reach and frequency and last-touch attribution.
To make buying easier and to support different types, Netflix partnered with DSPs where marketers can now set up private 1:1 marketplace deals directly with the streamer through The Trade Desk, Google’s Display & Video 360 or Xandr. It plans to extend buying capabilities to include programmatic guarantees in November. It previously named Magnite as a partner on the supply side.
In October its making solutions from Google’s Campaign Manager and Innovid for impression verification available across all buying channels and expanding DoubleVerify and Integral Ad Science tools for fraud and viewability verification into programmatic channels. Pointing to recent work, Reinhard said the streamer has been executing multiple programmatic campaigns over the last few weeks with advertisers including Expedia, Ford, T-Mobile, Mercedes-Benz, Novartis and American Eagle. Netflix currently offers programmatic private marketplace buys in the U.S., Canada, Brazil and Mexico. It plans to extend those capabilities more globally in the coming months.
“Over the last few months, we’ve hit great milestones for our ads business including closing another successful Upfront market, building and implementing an expanded programmatic suite, enhancing our global measurement capabilities, and securing impactful global ad campaigns,” Reinhard stated. “We’ll continue to improve the Netflix ads plan to ensure our members are delighted by the experience while simultaneously creating solutions that deliver results for our marketers, putting brands at the center of the best shows and films in the world, to a highly valuable and engaged audience.”