Netflix has reported that its ad-supported plan now attracts 70 million viewers monthly, a substantial increase from May. This signifies a nearly twofold growth in viewership since the ad-supported option was introduced.
According to Amy Reinhard, Netflix’s president of advertising, "more than half of new subscribers in countries where the ad-supported plan is offered are choosing this option." Reinhard described this growth as "steady progress" as Netflix seeks to diversify its revenue stream beyond traditional subscriptions.
Despite this growth, Netflix's ad business remains relatively small compared to its competitors. For years, Netflix operated as an ad-free service, only shifting its strategy after experiencing a decline in subscriber numbers in 2022.
To bolster its advertising efforts, Netflix has implemented various initiatives, including partnerships and live programming options like NFL and WWE events, which generate new ad inventory. The ad-supported plan is positioned as a more affordable alternative for budget-conscious users.
With 282.7 million subscribers globally by the end of the third quarter, the plan is currently available in 12 countries, including the US, Brazil, and the UK. This approach contrasts with companies like Amazon, which recently increased fees for users opting to skip ads, encouraging a shift towards ad-included plans.
Netflix has implemented ad measurement partnerships to prove the effectiveness of campaigns to attract advertisers. Recent data reveals higher engagement rates among Netflix ad-supported viewers compared to other connected TV services. For example, a US campaign for an automotive client witnessed an increase in search and web visits, while a beauty campaign in Mexico saw a 30-point surge in brand recognition.
Netflix plans to roll out its in-house ad technology globally by 2025, with Canada already exclusively using this system. This shift aims to provide advertisers with more control and data on campaign performance.
The company recently sold all available ad slots for two live NFL games on Christmas Day, featuring sponsors like FanDuel and Verizon. This event coincides with the release of "Squid Game" Season 2, which will feature several advertisers, including Kia in South Korea.
Netflix has also expanded its programmatic ad-buying capabilities in key markets, with plans to extend this service to Europe and Asia in 2025. As Netflix continues to strengthen its ad-supported infrastructure, it aims to attract more subscribers and advertisers into its ecosystem.