Netflix to Shift Advertising Strategy, Boost Revenue for Ad-Tier Service

Global streaming service Netflix looks to be changing its advertising strategy by developing targeted ad formats in an effort to boost revenues for its latest ad-supported subscription tier. 

During this year’s Cannes Lions festival, Greg Peters, Netflix’s co-chief executive, and Jeremi Gorman, president of worldwide advertising, courted global advertising executives and unveiled plans regarding the company’s ad strategy, the Financial Times reported.

During the talks, advertising executives suggested “episodic” campaigns with a series of different ads to address customer complaints of seeing the same ad repeatedly while streaming.  

The Netflix executives also reportedly shared that the company aims to introduce new ways for brands to advertise and allow them to directly target consumers in ways that can’t be done on linear TV channels.  

One Hollywood marketing executive noted that Netflix’s partnership with Microsoft, which provides advertising technology support to the streamer, is “likely” to come to an end by 2024, which would allow the company to innovate when it comes to advertising.  

“The plan for Netflix was just to get to market quickly last year. This is not the final way they’re going to do it. They are going to be very creative,” he explained.  

Another advertising executive, meanwhile, believes that the streaming giant can leverage its data on customers in ways that still safeguard their data protections.  

“[The] old days of making episodic work may be back because before you could never guarantee what people have seen already. Now you can write 15 episodes of an advert and guarantee that the viewer will see them in the right order. So, that’s really interesting,” he shared. 

With the success of the password-sharing crackdown it rolled out early this year, the streaming giant is also limiting the subscription options of its users. 

According to market research conducted by Antenna last March, the number of users subscribing to Netflix’s basic with ads tier spiked from 9% to 19% in January.  

Last week, the company also began testing the removal of its basic tier subscription in Canada, leaving Netflix users to choose between its ad-powered basic tier for $7 a month, its ad-free standard tier for $15.50 a month, or its premium tier for $20 a month.