Netflix offering 35-45% discounts for upfront ad spend, advertisers piling in, streaming giant targeting log-in sharers to build ad audience

News Plus 13 Sep 2022 - 4 min read

Netflix offering 35-45% discounts for upfront ad spend, advertisers piling in, streaming giant targeting log-in sharers to build ad audience

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“Everyone wants in. They are going to be absolutely bombarded. There is going to be so much interest. But not everyone will be able to sustain that given the price,” one agency exec said of Netflix's ad plans.

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Tags: Netflix AVOD netflix, advertising, SVOD

Netflix is likely to book tens of millions of dollars in upfront commitments from ad agencies in Australia, offering big discounts for those committing to spending early. Prices per thousand viewers – known as CPMs – are around $45 to $50 for agencies and $65 to $80 for casual advertising partners. There’s also a pricing push for 30-second ads over 15-second versions, though both will be allowed. Netflix will target the 100 million people globally “stealing” access through shared log-ins to build its advertising audience.

What you need to know:

Netflix is offering big discounts to early partners to its ad-supported tier, with CPMs ranging between $45 and $50 for upfront commitments, agencies say, and $80 for casual advertising partners.
The streaming service, which will launch an ad-supported tier in November in Australia, is pushing its 30s spots to reduce clutter. A 15s ad costs 75 per cent of a 30s ad, whereas it is normally around 60 per cent for the major TV networks.
Disney+ is launching its own ad-supported tier in the US first but is increasing the price to access its ad-free tier. Netflix has been widely reported as offering a cut-price level with ads.

Netflix is offering big discounts for major advertisers committing to spending on its new ad platform up front, with cost-per-thousand views (CPM) ranging from AUD $45-$50 for agency deals and $80 for casual media buys.

The streaming giant, which plans to launch an ad-supported tier of its service in November in Australia, will target 100 million global users “stealing” Netflix by sharing log-ins to build its advertising audience.

Those briefed by Netflix on its ad plans say the company would be prioritising 30-second spots for simplicity and lack of clutter.

“A 15s spot usually costs about 60 per cent the price of 30s, but on Netflix 15s is 75 per cent of a 30s… why wouldn’t you do 30s?” one exec said.

Another agency exec familiar with the plans said Netflix would be open to 60s ads – but they would “need to be the right content”.

There will be three targeting options: Top 10 videos, Genre and Country, with audience demographics likely to come next year.

“Everyone wants in. They are going to be absolutely bombarded. There is going to be so much interest. But not everyone will be able to sustain that given the price,” one agency exec said.

Another added: “There’s a lot of enthusiasm. It’s a previously unreachable audience for SVOD with an interesting format.”

No cryptocurrency ads, political advertising or gambling ads will be allowed on the platform, nor will advertisers be able to target ads towards children.

Some government agencies, however, like tourism bodies, will likely be allowed. “But no Clive Palmer ads or Covid ads,” an exec said.

Disney+ v Netflix pricing

Netflix has been widely reported as looking to introduce a lower price for its tier with advertising, in the A$8 to $10 range – half of its most popular A$16.99 (US$15.49) ‘Standard’ level. But notably, Netflix has not publicly confirmed its pricing and has kept quiet in discussions about it.

“They’re being pretty cagey on what the number looks like,” another agency exec said.

Meanwhile, Disney+, which is expected to launch in Australia in mid-2023, is taking a different approach. The current price of its ad-free tier in the States ($US7.99) becomes the price of its advertising-enabled tier, while the ad-free level will jump at a higher price point, US$10.99 a month. In Australia, Disney+ currently costs A$11.99 a month, implying an ad-free tier would cost between A$14 and A$16.

“Given interest rates and costs of living are increasing, it will be interesting to see what Netflix does. I question Disney’s approach,” one exec said.

Unlike Netflix, however, whose ad business will be globally run by Microsoft and its newly acquired Xandr, Disney already has a dedicated sales team in Australia, led by Nik Weber. Disney already sells ads for its Disney, ESPN and National Geographic channels, for example.

There will be other ad-funded streaming services, too, with Paramount expected to launch Pluto TV. Foxtel Media CEO Mark Frain told Mi3 late last year ad-funded streaming services would come “pretty quickly” to Australia, and start to replace linear audiences. “We’re definitely going to see it shift,” he said.

Speaking about the impending arrival of Netflix – and Disney+, one media agency exec said: “I wonder if television networks realise what’s coming.”

A spokesman for Netflix said: "We are still in the early days of deciding how to launch a lower priced, ad-supported option and no decisions have been made. So this is all just speculation at this point."