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Check out our latest Blog

Netflix to Enter Ad Space in T-Minus Two Weeks

It’s been years in the making – commercials are headed to Netflix for a cheaper ad-supported plan. On November 3rd, Netflix will kick off its Netflix Basic with Ads.

What’s the price for streamers?

  • Netflix Ad-Supported Plan: The price for this cheaper plan is $6.99 per month (available in twelve countries). Netflix Chief Operating Officer, Greg Peters shared that the ad-supported plan will not allow subscribers the full catalog of TV shows and movies due to licensing restrictions from the studios. Users will not be able to download titles for offline usage.
  • Netflix Basic Plan: $9.99 This plan only allows streaming one device at a time. Users can still download titles offline and have access to the full catalog of TV shows and movies.

Both plans will support video quality up to 720p HD.

How many ads per hour?

Greg Peters added, “ads will be either 15 or 30 seconds which will play before and during TV shows and films. The Netflix tier with ads will serve an average of 4 to 5 minutes of ads per hour, roughly in line with the ad loads of Peacock and Disney+ with ads. New-release movies will include only pre-roll ads to “preserve the cinematic experience.”

Is it worth it for advertisers at $65/CPM?

Along with the adjusted plan price, is the option to advertise at a $65/CPM. Is it worth it? Well, that depends on several factors. I caught up with our Senior Director of Strategy at Chacka Marketing, Shane Ragiel and he had a few thoughts on the matter:

“While the $65 CPM may be a hard pill for some advertisers to swallow, for a high-impact and non-skippable ad unit, I am sure that we should expect large brands to jump on this as a branding opportunity.

– Shane Ragiel, Sr. Director of Strategy at Chacka Marketing

While some platforms allow advertisers to enter their new ad placements with a lower CPM and gradually increase it as popularity and results increase, Netflix is gambling on their popularity with advertisers by setting a higher price threshold and as a result, will encourage these larger brands to be a part of their ad mix. Ragiel further explained, “strategically, just as with ad-supported streaming music on Spotify and Pandora, we would encourage our advertising partners to consider the user who is most likely to subscribe to avoid these ads when evaluating the placement.”

In cases where we are promoting a product or service that resonates most with users who are more likely to pay a premium, this might not make the most sense given the higher cost and greater risk.

You can purchase Netflix ads exclusively through Microsoft. This was announced back in July as their global advertising technology and sales partner. Nielsen was announced as Netflix’s audience measurement partner.              

Disney+ is Next

This is a high rate for industry standards, but it may not be the most expensive either. On December 8th, Disney+ will have a similar ad tier option:

  • Disney+ Basic (with ads): $7.99 per month
  • Disney+ Premium (no ads) $10.99 per month.

We can assume the CPM and ad-tier pricing could be close to what Netflix is offering or even more.

Click here to view the individual pricing plans and Disney + Hulu bundle pricing changes.  Stay tuned for more on Disney+ in the coming weeks and how subscribers react to the upcoming ad-tier on Netflix.

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