Local brands have taken a punt on Netflix ads despite little reassurance on audience numbers and no overt advertising of the ad-funded tier by Netflix – and buyers say more are set to join the fray in the coming days.

Netflix ads launched last week. Early local advertisers include Tourism South Australia, AAMI, Commbank, Chemist Warehouse, Dare, Hungry Jacks, NAB, NBN, Spotlight, Target, Westfield, Coles, Officeworks and Woolworths.

International advertisers include Amazon, Audible, Dell, Dominos, Dior, Ebay, Ford, Hyundai, JD Sports, Kellogg, L’Oreal, Mars and Specsavers. Ads can be bought both locally and internationally via Microsoft.

Dirty word?

Netflix has made no promises on numbers and is yet to explicitly market the ad-funded tier. A spokesperson told Mi3 the platform will continue to avoid the word ‘ads’ in digital marketing, instead focusing on the cheaper price.

Marketing efforts so far are predominantly digital, though out of home ads for specific shows will now start to feature the $6.99 price-tag, per the spokesperson, who suggested Netflix may also use the tier to target lapsed subscribers or those thinking of cancelling.

Some ad buyers told Mi3 they are holding back to see numbers, especially as global CPG/FMCG brands, typically large TV spenders, have rigid reporting requirements. Some holdco-owned agencies said that most 2023 plans had not yet started, and therefore TV advertisers with 2022 spend fully committed are unlikely to trial the service until next year.

While Netflix remains publicly mute on numbers, other buyers said the platform has outlined forecast impressions to early advertisers alongside CPMs. One suggested that headline prices initially floated have been negotiable – "they have come down a bit" – though that Netflix had not uniformly proffered reported 35-45 per cent discount rates in return for annual commitments.

Who dares...

Starcom handles Dare’s media account. CEO Nick Keenan said that the brand is happy to test the waters despite having no audience numbers, limited targeting and reporting.

“It’s a leap of faith. But judging by that list of brands, it’s a leap quite a few are prepared to make. Marketers see the opportunity. Nothing builds brands better than TV ads in that passive environment – and streaming is where linear audiences have gone.”

Keenan said there may be some fear of missing out should Netflix’s ad-tier audience scale relatively quickly, while others will be keen to build early relationships with the platform – or risk waiting months to get the second press, as some buyers in the UK have complained.

“When Facebook started to get into the ad game, it didn’t even have a sales team. But everyone that got in early got the benefit of doing so. Likewise TikTok – the numbers rocketed and the early advertisers reaped the reward. It may be that Netflix takes a similar trajectory, and if that’s the case, nobody will want to want to wait out a three-month cycle to get another look in,” said Keenan.

“It may be that [Netflix ads] fails. But as long as imperfect metrics and audience numbers have been communicated to clients, some will take that leap of faith. Netflix has communicated that there will not be a day-to-day feedback loop, and we’ve been very open and transparent with clients around that.”

Next wave

Mediacom investment boss Nick Thomas backed Keenan's view.

“We’ve been very transparent with clients about what Netflix Ads is, and what it isn’t,” he told Mi3. 

“Given Netflix’s footprint, you are going to reach somebody. It’s relatively inexpensive [in absolute terms] at entry level to test the waters and clients are interested in reaching audiences that have been off limits for a long time. Brands have been coveting Netflix audiences for years so why would they not want to play there?” 

While lack of reporting clarity has deterred some advertisers, Thomas suggested there "should be no misalignment" between buyers and brands provided "transparent" expectations have been set upfront. 

“All brands want measurement and reporting, but they also want learning. Some are prepared to fund that learning ahead of the next wave of ad-supported streaming. To that point, I think [Foxtel's] Binge launching an ad tier is absolutely the right move,” said Thomas. He thinks more streamers will come to market locally. 

“Nine are saying no ads on Stan. But for how long?” 

While GroupM accounts Commbank, Dell, JD Sports and Westfield are visible early Netflix advertisers, Thomas indicated there are more local brands from the Essence-Mediacom stable signed up for platform's first wave this side of Christmas. Netflix's account locally is handled out of Wavemaker.