Netflix ad tier slow to take off in Australia

Despite subscriber numbers to Netflix’s new “Basic with Ads” package coming in well below projections, large media buying groups are keeping their eye on the bigger long-term prize.

Background

Launched last November, take-up of the $6.99 subscription offer including some ads (around a third of the ad volume on free-to-air TV), is reported to be 50% or more below what was initially projected. Mi3 calculates total numbers at between 75,000 and 90,000. 

Mi3 also reports that five major buying groups have committed at least $6m each to be able to reach ad tier subscribers over the next year. But currently they are not getting the number of ad impressions anticipated. For example, the 10 or 11 million impressions available for February is half what was expected.

What the agencies say 

So far, agencies are relatively unconcerned, seeing indications that take-up is building from a low base. “Omnicom’s view is you want to follow the audience over time. You’ve got to accept, in that new build phase, some will work better than others,” explained OMG chief investment officer Kristiaan Kroon.

For Starcom CEO Nick Keenan, it’s about testing and learning: “Have we got an uplift in sales, more inquiries, more conversions – how did it contribute to the DTC [direct to consumer] platforms of our clients?”

Why it matters

Some agency executives have expressed frustration that Netflix isn’t doing more to promote its new ad tier. With Foxtel launching its own Binge platform in spring, promising an initial audience of 400,000 along with 100 million ad spots, Netflix may indeed need to step up its efforts. 

Its ad tier could also be given a boost when it clamps down on password sharing and new users pick up the cheaper option. And as Australia moves into winter, more people may be inclined to stay indoors and invest in a cheaper streaming package. 

Sourced from Mi3