Netflix Expands Ad Strategy as Budget Plan Gains Popularity
Netflix has reported significant growth in the popularity of its ad-supported streaming plan, following a strategic adjustment to its revenue model. The company now boasts over 190 million monthly active viewers who engage with advertisements through its budget-friendly subscription plan priced at $7.99.
Growth of Ad-Supported Streaming
This latest surge follows a reported 94 million monthly active users engaging with ads back in May, which then accounted for around 170 million total viewers. However, Netflix has changed its methodology for calculating this audience, which complicates direct comparisons.
New Measurement Approach
Netflix now defines monthly active viewers as individuals who watched at least one minute of ads each month. This new approach involves estimating how many people per household are watching, rather than simply counting profiles that streamed ad content. Amy Reinhard, Netflix’s president of advertising, emphasized that this data reflects a more accurate representation of the audience in the room.
- Previous method: Counted profiles watching ads
- New method: Counts individuals watching ads for at least one minute
Future Expectations
In a media briefing, Reinhard expressed satisfaction with current growth and highlighted the potential for expansion of the ad-supported plan globally. Netflix aims to enhance customer experience while presenting advertisers with more options for engaging viewers.
This ad venture started in 2022 in response to investor pressure for revenue diversification, marking a notable shift for a company traditionally resistant to advertisements. Last month, Netflix projected it would more than double its ad revenue by 2025, although specific figures were not disclosed.
Strategic Advertising Initiatives
In addition to expanding advertising options, Netflix has begun demographic targeting based on education, marital status, and household income. Partnerships with varying brands, like Peroni Nastro Azzurro, have also begun, featuring advertisements linked to popular shows like “Emily in Paris.” Furthermore, the company has initiated dynamic ad insertion testing with programs such as WWE Raw, aiming to roll this out in the U.S. for NFL Christmas Gameday.
Competing in the Streaming Market
As competition intensifies, many streaming services have increased subscription prices to enhance profitability. Earlier this year, Netflix raised the fees on its plans, a move consistent with market trends among other streaming platforms.
With the evolving landscape of digital content and advertising, Netflix’s strategy to diversify its revenue through ads appears to be gaining traction and fostering growth in its subscriber base.
