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Netflix is further lowering the prices of its ads, according to three ad buyers who talked to the streamer in July.
Netflix will charge advertisers CPMs (cost per thousand viewers) between $20 and $30 for some of its ad inventory, the buyers said. Netflix will charge $20 for a 15-second ad slot and $25 for a 30-second ad slot, one buyer said, while another buyer said Netflix was charging in the high-$20 range.
Rates for Netflix inventory have been precipitously dropping in the almost two years since the streaming powerhouse said it would start selling advertising time. The Wall Street Journal reported in June that Netflix was talking with buyers about charging $29 to $35 CPMs for ads, a drop from a reported $39 to $45 in 2023. Netflix initially came to the market with an eye-popping $65 CPM in 2022.
Netflix's new talks with buyers coincide with the streamer's push into programmatic. Ad buyers pay different rates depending on the types of ads they buy (such as variations in length, targeting criteria and method of transaction) and the existing relationships they have with Netflix. The buyers' conversations with Netflix on ad pricing were not necessarily about ads sold programmatically.
This summer, the streamer is beginning its partnership with adtech firms The Trade Desk, Google's Display & Video 360 and Magnite and testing its ad server, which the company said in May it would build itself.
The Trade Desk is offering one-to-one private marketplace (PMP) deals on Netflix inventory this month, followed by programmatic guaranteed inventory in November, the first buyer said, after speaking to The Trade Desk in addition to Netflix about the timeline of the ads.
While Netflix's conversations with buyers about pricing in July were not inherently tied to its programmatic offering, The Trade Desk is also selling Netflix inventory at lower than precedented rates.
The standard rate for a 30-second ad slot in a Netflix PMP sold via The Trade Desk would be $25, the first source said. The source spoke to Netflix and The Trade Desk separately, noting that Netflix is also charging $25 for a 30-second ad slot (the same as The Trade Desk when it sells this Netflix inventory).
A Netflix spokesperson said that programmatic inventory—which can be sold by Netflix directly or by third parties—will be priced lower than inventory purchased via direct insertion order, a manual way of buying ads. Programmatic pricing starts at a minimum price, or a floor, and what advertisers ultimately pay is usually higher via the auction process and once targeting criteria are layered on.
For the Netflix PMP offered this month via The Trade Desk, a 10-second ad's floor is $15, a 15-second ad's floor is $20, a 45-second ad has a floor of $37.50 and a 60-second ad has a $50 floor, the first source said. There are also additional charges for targeting by age, gender or genre, or to reach the top 10 most popular programs on Netflix—attributes Trade Desk buyers can use this month, the first source said.
Netflix declined to comment on the record but did not dispute the accuracy of the pricing changes.
Netflix has long charged among the highest prices of its rivals, but buyers told ADWEEK that the new lower prices make Netflix more competitive.
Amazon's Prime Video shook up the streaming market when it launched its ad tier earlier this year, with initial CPMs for some inventory of $26.
Prime Video also automatically opted in viewers to advertising and offered an option for them to pay more to turn off ads. Netflix's ad tier is opt-in. As a result, Amazon boasted an average monthly ad-supported reach of 200 million customers globally during its May upfront presentation. Meanwhile, after two years, Netflix's global monthly active user total for its ad tier was 40 million.
One buyer said the streamer attributed lower prices to having more viewers in its ad tier. In its second-quarter earnings call last month, the company said it had sequentially grown its ads member base by 34%.
Netflix only makes up about 2.7% of U.S. connected TV ad spending, according to eMarketer, well behind Hulu, YouTube and Amazon. Despite this, Netflix still has the largest streaming audience in the U.S. behind YouTube, according to eMarketer, with 179.4 million viewers (many of them pay to watch Netflix without ads).
Posted In: NFLX
