Topline
Netflix is not meeting viewership expectations for some advertisers and is allowing some companies to take payments back for ads that have not yet run, Digiday reported Thursday, less than two months after the streaming service launched a cheaper, ad-supported tier to combat subscriber losses.
Close-up detail of the Netflix app icon on an Apple iPhone 12 Pro smartphone screen, on November 11, … [+]
Key Facts
In some cases, only 80% of expected viewership was delivered, five anonymous agency executives told Digiday, though numbers vary across clients.
Netflix agreed to a “pay on delivery” deal with its initial advertisers, where clients would only pay for the views their ads actually received, and Netflix would return leftover money spent to them at the end of each quarter—unlike the model followed by traditional TV, where networks keep payments and owe advertisers future viewership, according to Digiday.
Not all advertisers have taken back money from Netflix, some executives said, with some companies choosing to push their ad buys to 2023, when they believe the audience on Netflix’s ad-supported tier will grow.
Netflix is still seeking advertisers for next year, the executives said.
The streaming service’s stock dropped over 8% on Thursday.
A Netflix spokesperson told Forbes, “While it’s still very early days for our ad supported tier, we’re pleased with the successful launch and the member engagement on the Basic with Ads plan, as well as the eagerness of advertisers to partner at the outset.”
Big Number
2.4 million. That’s how many subscribers Netflix gained in the third quarter, after losing more than 1 million subscribers in the year’s first two quarters. The rough start to the year was the first time Netflix reported subscriber losses in 10 years. Netflix predicted it will add 4.5 million subscribers in the fourth quarter, though it’s not clear how many of those the company expected for its ad-supported tier. On Friday, Netflix shares rose 5%, and it was the biggest rising stock on the S&P 500 in the last six months.
Key Background
When Netflix initially reported subscriber losses in April, it said it would explore launching a cheaper ad-supported tier. The new addition to the streaming service launched earlier than expected, in November. Netflix is charging $6.99 a month for this kind of subscription, which does not include its full library or the ability to download programs. Disney+ launched its ad-supported tier last week, for $7.99 a month. When HBO Max and Discovery+ combine into one new streaming service next year, it will offer a free, ad-supported tier, as Peacock does now.
Further Reading
Netflix Adds 2.4 Million Subscribers After Months Of Declines (Forbes)
Netflix’s Cheaper Ad-Supported Tier Launching November 3 (Forbes)
Source: https://www.forbes.com/sites/marisadellatto/2022/12/15/netflix-reportedly-isnt-meeting-viewership-expectations-for-some-advertisers/