Netflix Launches Ads - How Will it Change the CTV Ecosystem?
Mins Read
October 21, 2022

Netflix gained 2.4 million subscribers in Q3 2022 - which boosted the company's revenue by 6% YOY. The company is now introducing its new AVOD (advertising video on demand) supported pricing tier that is launching on November 3rd. Let's dive into how this move will change CTV advertising.

Netflix Basic will launch on November 3rd in the U.S. for $6.99/month and will be ad-supported. The new pricing tier gives Netflix another way to monetize its content - outside of the traditional subscription model. Disney+'s ad-supported tier will be  $7.99 per month when it launches in December, while HBO Max with ads is $9.99 per month.

Netflix is well aware that advertising dollars are shifting to CTV. In fact, they've been preparing for this moment for years. The launch of their new AVOD  pricing tier is a direct response to the growing demand for CTV advertising.

AdAge reported that Netflix is expecting the ad-supported tier to generate 500,000 subscribers by the end of the year.

What does this mean for the CTV advertising ecosystem?

Netflix's launch of an AVOD pricing tier will have a profound impact on the CTV advertising ecosystem. Here are three ways that Netflix's AVOD-supported pricing tier will change the landscape of CTV  advertising:

1. Increased CPMs

2. More Ad Inventory

3. More Targeting Options

1. Increased CPMs

Netflix's AVOD-supported pricing tier will likely result in increased CPMs (cost per thousand impressions) for CTV advertising. This is because Netflix will now be able to sell advertising inventory directly to brands. Some resources are saying that Netflix may be starting its CPM rates at $65.

2. More Ad Inventory

Netflix's AVOD-supported pricing tier will also result in more ad inventory being available for CTV advertising. This is because Netflix was essentially holding the torch for non-ad supported streaming platforms. Now that they are allowing ads, there will be more streaming platforms that will follow suit.

3. More Targeting Options

Netflix's AVOD-supported pricing tier will also result in more targeting options for CTV advertising. This is because Netflix will now have access to first-party data that can be used to target ads to specific audiences. Netflix's content recommendation algorithms are robust, and if they utilize that data to pitch to their advertisers in a strategic way, they could have a very robust content-based targeting engine on their hands.

Speaking of content-based targeting, contextual-based CatapultX On-Stream could be a great addition to CTV streaming platforms like Netflix without having to make users wait for ads to play to enjoy their content.

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