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MEDIA BUYING

Advertising on Netflix would be a boon to marketers and media buyers

By our News Team | 2022

Netflix has never accepted paid advertising, but may follow video-streaming competitors in doing so as subscriber numbers drop.

When the going gets tough for video entertainment-streaming platforms like Netflix, the response seems to be to seek paid advertising in an effort to attract more subscribers via lower-cost packages.

Netflix, which has always resisted the lure of paid advertising within its content, announced recently that it will likely be introducing advertising on the platform within a few years. 

The strategy seems to be to offer lower-cost options to subscribers, which would then be subsidised by the ad revenue. In going this route, Netflix would by following similar video-entertainment platforms around the world – among them Disney and Home Box Office (better known as HBO). 

In mid-April, Netflix announced that it had lost subscribers for the first time in more than a decade. In the North American market alone, its subscriber number are down by 600 000 in the last financial quarter.

Media Buying

Photo by August de Richelieu from Pexels

“Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription,” co-CEO Reed Hastings said. 

Give advertising-tolerant consumers a choice

“But as much as I am a fan of that, I am a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising-tolerant to get what they want makes a lot of sense.”

The advertising industry seems to have reacted positively to the news. In Australia, the Sydney Morning Herald reports that media buyers expect Netflix to become a significant force in the local advertising market if it adopts cheaper, ad-supported subscriptions.

“[Advertisers] are falling over themselves about Netflix,” Joe Frazer, Managing Partner at media agency Half Dome, told the newspaper, adding that advertisers would likely flock to the platform due to its large audience base and its strong reputation among consumers.

“Video-based advertising is just the biggest growth area at the moment, based on audiences shifting their consumption of content from linear to [broadcast video on demand] and streaming platforms,” he said.

Meanwhile, business magazine Forbes reports that, with an ad-supported tier, Netflix will potentially open its content to more users of different economic backgrounds who couldn’t afford Netflix previously. 

“This becomes even more important outside of wealthy countries like the US, as today’s streaming marketplace looks vastly different from five years ago,” Forbes said.

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