Netflix rolled out in-house ad tech in the US at the start of April and during the company’s earnings call Thursday executives said the SVOD giant is only just stepping up to the plate in its advertising play.
Netflix solidly surpassed earnings expectations in Q1 and the streamer expects to double its advertising revenue in 2025. Asked by equity analysts on the call regarding what it’s seeing in the ad space and approach to the scatter versus Upfront market, Netflix Co-CEO Greg Peters said it's keeping a close eye on the market but “aren’t currently seeing any signs of softness from our direct interactions with buyers.”
In fact, he said it’s the opposite, citing “positive indicators from clients as we approach our Upfront event.”
Per AdWeek, Netflix plans to hold its Upfront event to woo ad buyers on May 14.
In terms of not seeing softness in advertising that others might be experiencing amid broader economic uncertainty, Peters suggested it could be a matter of Netflix being new to the ads game and only seeking to win a small proportion of the total ad spend pie during the Upfront.
“That smallness probably provides us some insulation to market shifts right now,” he said.
Plans for in-house ad tech have been underway since last year and Netflix rolled out the new tech stack in Canada before the US. It just started to sell into its in-house ad tech stack in the US and plans to expand to 10 additional ads markets in stages over the next few months, bringing new capabilities advertisers have been asking for.
“Based on everything that we're seeing right now, we continue to expect that we will roughly double our advertising revenue in 2025 through a combination of both Upfront programmatic expansion and scatter,” Peters added.
Asked what inning Netflix is in for its advertising ambitions, executives laughed and likened the current position more to “stepping up in the plate, starting to swing” rather than fully in play.
Increasing flexibility, targeting capabilities
The biggest initial benefit Netflix expects from having its own ad server is enabling more flexibility for advertisers, including more ways to buy and fewer activation hurdles.
“We have the ability to improve that overall buyer experience iteratively,” Peters said. “It just makes it easier to transact with Netflix, and that, of course, drives increased sales.”
Over time it expects to enable more capabilities such as programmatic availability, enhanced targeting that leverages more data sources, and beefing up measurement and reporting (the latter a request Peters said Netflix hears all the time from buyers).
Another big benefit of owning the tech stop is more control “to create a higher quality ad experience” for users, which helps for aspects like increasing ad relevance.
Eventually Netflix envisions getting ad tech capabilities to a sophisticated and mature enough level to match the right ad with the right viewer alongside the right piece of content.
“We think putting those three things together drives superior campaign outcomes for advertisers. We think it’s a better experience for members,” Peters said. “So it’s win, win, win.”
Still, execs emphasized it’s only the first stage, having just launched in Canada and the US, with many years of building ahead.
That said, in that short time Netflix has “been able to significantly already expand our targeting capabilities,” Peters noted, which now include targeting based on Netflix-specific data such as life stage, interest and viewing mood in the US. It has also enabled advertisers to target based on their own onboarded audiences and audience segments provided by a select set of third-party vendors.
In 2026 Netflix expects to do more of that with targeting capabilities and export those globally, alongside more measurement functionality. In 2027 the SVOD giant will look at specific, focused investments “at a higher order” in data capabilities like ML-based optimizations and advanced measurement and targeting.
Finally, a benefit Peters cited of having its own ad tech stack is the ability to create new ad formats quickly, which he said provide “more spaces that we can point all of that improved targeting capability against.”
At last official disclosure in November, Netflix's streaming plan with ads had 70 million monthly active users. And while Netflix is no longer reporting subscriber metrics alongside quarterly releases, it expects the lower price point on its ads plan to help amid broader economic uncertainty and concerns of a recession in the face of a global tariffs war.
“I think that having the low-cost ads plan in our largest markets also gives us more resilience,” commented Peters. “And we think that that we represent an incredible entertainment value, starting at $7.99 [in] the US and Canada…it's an accessible price point, and we really do expect the demand for entertainment to remain strong.”