Upfronts: Netflix Says It Has Nearly 5 Million Users on Ad Tier
Netflix introduces presenting sponsorships and packages of its Top 10 shows
At its first upfront presentation, Netflix shared some hard numbers with advertisers, saying it now has nearly 5 million global monthly active users for its ad-supported tier.
The median age for those users is 34, the streamer said, considerably lower than the senior citizen-level average for most broadcast and cable channels.
Netflix had been planning to hold its first upfront presentation for advertisers in person, but canceled the event because of concerns picketing writers could cause a disruption and safety issues for pedestrians near the Paris Theater in New York.
Instead, Netflix held its presentation, appropriately enough, via streaming.
After years of forswearing commercials, Netflix co-CEO Greg Peters told advertisers and media buyers: “We share a common goal, which is building connection. You want to connect consumers with your amazing brands. And we want to connect them with amazing entertainment they’ll love.”
Netflix launched its ad-supported tier last year, and got off to a slow start, with fewer subscribers than some advertisers expected and fewer targeting capabilities than other companies that have been in the business longer.
“We worked hard to be brilliant at the basics, focusing on areas advertisers told us matter most — like geo, age and gender targeting; third-party verification; and deploying the right brand suitability mechanisms for [advertisers] to make the best decisions for [their] brand,” said Jeremi Gorman, president, worldwide advertising for Netflix.
“While we’re focusing on reaching parity, we’re also innovating,” Gorman said. “We treat our ads with the same care we treat our incredible content: serving them locally; seamlessly transitioning between shows and ads with no latency; and implementing industry-leading frequency caps with an ad load of four to five minutes per hour.”
Peters said the number of subscribers watching Netflix with ads is growing. She said that since early this year, the member base has more than doubled and about 25% of new signups are picking the basic plan with ads.
He added that 75% of ad-supported members are 18 to 49 years old, the viewers TV advertisers have traditionally coveted.
Netflix said it will be able to better connect with and measure its viewers.
Peter Naylor, VP of global advertising sales at Netflix, said upfront buyers will be able to be presenting sponsors of some of its most popular series, beginning in the U.S. The will also be able to sponsor collections of shows around events or holidays like Valentine’s Day.
Netflix has also created a Top 10 package that will enable brands to advertise specifically in Netflix’s most popular shows.
In terms of measurement, Netflix said advertisers will be able to use Nielsen Digital Ad Ratings to get deduplicated viewership and reach and frequency data for campaigns.
Netflix is also working with research and analytics company EDO to measure outcomes and engagement.
According to EDO, viewers are more than four times more likely to engage with an ad on Netflix compared to other streamers and more than four and a half times more likely than with linear TV, Netflix said.
“Netflix revolutionized streaming with House of Cards,” co-CEO Ted Sarandos said. Now it will create “similar breakthroughs in advertising” that “can be just as impactful,” he said.
“We have a long way to go to build scale in advertising,” he said, but Netflix is working on a “better future for ad-supported streaming” and the opportunity to “build something together” with advertisers.
Netflix also talked about the programming that’s generating all of that engagement. In keeping with the restrictions caused by the Writers Guild of America strike, executives introduce clips of Netflix series instead of actors.
Netflix said its upcoming new shows include Shawn Levy’s All the Light We Cannot See; Griselda, with Sofía Vergara; and the latest epic from David Benioff and D.B. Weiss, 3 Body Problem.
Returning series include favorites like Bridgerton, Stranger Things, Formula 1: Drive to Survive, Outer Banks and Cobra Kai.
Netflix announced renewals of Ginny & Georgia (S3 and S4) and Virgin River. Those follow recent renewals for The Night Agent (S2) and The Diplomat (S2).
Reality show Love Is Blind (S5) will be back in September, and Squid Game: The Challenge will debut in November.
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Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.