One year after launching a Netflix tier with ads, the SVOD giant plans to introduce new advertising formats in 2024, including when viewers binge a show.
In an announcement marking the one-year anniversary since Netflix debuted an ad-supported tier, the company said starting in Q1 2024 advertisers globally will be able to tap its new binge ad format as viewers watch multiple episodes of a show in a row. After three consecutive episodes viewers get to watch a fourth episode ad-free, with a hero spot served that says the commercial free episode is made possible by a certain advertiser. Netflix is also launching the ability to insert QR codes in ad creatives running on the platform in the U.S. starting in early 2024.
In addition, sponsorship ad formats are now live in the U.S. and set to expand globally next year, offering advertisers to align with titles, moments and live events. Netflix already kicked off Title Sponsorships on the recent season of “Love is Blind” with Frito Lay’s Smartfood. Next it plans to leverage the upcoming “Squid Game: The Challenge” reality series and the final season of “The Crown” to bring in ad dollars with additional title sponsor partners.
Moment Sponsorships, meanwhile, will become available at the end of this year before rolling out globally. That ad format allows advertisers to tap into cultural moments like local holidays. On the live event front, T-Mobile, Nespresso and others will be presenting Live Sponsor’s for The Netflix Cup, the streamer’s first-ever live sports event that features an all-star match play golf tournament with athletes from Netflix’s “Formula 1: Drive to Survive” and “Full Swing” series. Celebrity golfers and drivers will pair up to compete at the Wynn Golf Club in Las Vegas as the event is streamed live on Netflix November 14.
Netflix also said it’s working to bring more measurement capabilities into the fold and looking to partner internationally with third-party vendors for campaign verification in 2024. In October the streaming giant announced the integration of Nielsen One Ads.
“Our goal isn’t just to offer the same products and tools the industry has come to expect — although we’ve made a lot of progress on that front over the last year. It’s to build something bigger and better than what exists today,” stated Amy Reinhard, president of Advertising at Netflix, in the post. “We want to shape the future of advertising on Netflix and help marketers tap into the amazing fandom generated by our must-watch shows and movies.”
Reinhard took over as president of Netflix’s ad business in October after the abrupt departure of Jeremi Gorman, who had been in the role for a little over a year. Netflix is working to scale its ad-supported plan membership and pull in new revenue with its nascent advertising business, although reports over the summer suggested it didn’t yet have enough subscribers to offer the audience sizes that large advertisers desire. But Netflix is building up the ad-supported base and in Q3 touted progress. Netflix’s plan with ads now counts 15 million global monthly active users. In a letter to shareholders, Netflix said its ad plan subscribers increased nearly 70% quarter-over-quarter, accounting for approximately 30% of all new sign-ups in the 12 countries where it’s live.
It also made improvements to the ad plan, including allowing two concurrent streams, upgrading video quality to 1080p versus 720p, and enabling downloads by the end of this week. Netflix said that move makes it the only ad-supported streamer to offer downloads.
Netflix has said ad revenue won't be material to the business in 2023, but is looking at the long-term opportunity in a market it pegged at $180 billion, excluding China and Russia.
“Ad dollars follow eyeballs and more and more TV viewing is shifting from linear to streaming — we’re a leader in streaming engagement, and the engagement of our ad tier members is strong,” Netflix wrote in a Q3 letter to shareholders. “While we have much work to do to build out this business, we’re making good progress and laying the foundation for what we believe should be a multi-billion dollar revenue stream over time.”