Netflix looks to enhanced targeting, episodic formats for ad growth

Netflix, the subscription streaming service turned hybrid advertising company, is talking up new ideas that it hopes will drive growth for its ad tier.

Why it matters

It took some time, but since launching in October, Netflix’s ad-funded tier is beginning to account for a significant chunk of new sign-ups, meaning a stronger reach offer for advertiser brands. But it still has a long way to go.

During its second appearance at Cannes Lions, the streamer looked to its innovation pipeline to help woo clients, according to reports.

New ideas

The FT shares a handful of the new proposed formats:

• Episodic campaign formats to provide frequency but without repeating one spot – Netflix viewer data suggests a series of ads can be shown in order.
• Increased targeting, especially following the expiry of the streamer’s launch deal with Microsoft, built on its own back end.
• Ads in Netflix’s gaming experiences, for which there is as yet little detail.

The problem of reach

Netflix’s ad offer is developing and, having come to market at a point of relative maturity in online video advertising, it’s very possible that it could leapfrog some of its ‘legacy’ rivals.

According to one source, the company is already making more money per user on its ad tier than from its subscription tier, but the subscriber audience dwarfs the ad tier. Sustainable growth will require growing the ad-tier to meet advertiser demand beyond adding new formats.

Sourced from the Financial Times, WARC