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Despite challenges, Netflix says its ad tier is doing well • Alaska Green Light Blog

Despite challenges, Netflix says its ad tier is doing well • Alaska Green Light Blog

#challenges #Netflix #tier #Alaska Green Light Blog Welcome to Alaska Green Light Blog, here is the new story we have for you today:

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In November, Netflix unveiled its long-awaited ad-supported tier, offering customers in select markets, including the US, the ability to offset the cost of a Netflix subscription by allowing their viewing to be interrupted by commercial breaks. At the Consumer Electronics Show in Las Vegas, Netflix President of Worldwide Advertising Jeremi Gorman gave a first look at the product’s performance and the streamer’s future plans.

During an interview at Variety’s Entertainment Summit at CES, the executive said the company was pleased with the initial advertiser selection and their diversity.

“It’s really transversal,” Gorman said of the diversity of participating brands. “We’re seeing CPG companies, luxury companies, auto companies…[and] Retail trade. We’re seeing a wide swath.” This is also good for the customer experience, she noted, as viewers aren’t bored with one car commercial after another. “There’s a variety of types of advertising, and I think we’re going to continue to see that,” Gorman predicted.

The interview also addressed some of the early complaints and concerns about Netflix’s foray into advertising.

Among them is the most significant backlash the company received for its high ad prices when it asked about what one industry executive dubbed the “Super Bowl.” CPM’sHowever, Gorman justified the pricing, but acknowledged that the market will ultimately dictate what kind of pricing Netflix can achieve.

“From a supply-demand perspective, premium CPMs reflect two things: First, we just couldn’t accommodate that many advertisers. We certainly didn’t want to disappoint anyone. Second, the premium content environment in which the ads are displayed warrants a high CPM in my opinion.”

Whether Netflix represents a “premium environment” is, of course, up for debate. But Netflix appears to be adjusting its expectations.

“I think we’re certainly humble enough to understand that we’re at the forefront of the market, and besides, the market will more or less dictate what reasonable CPMs are,” Gorman said.

Another concern for Netflix’s ad-supported service has to do with what content may contain advertising. Because the streamer wasn’t set up as an ad-supported service from the start, many of its content deals didn’t include AVOD (Advertising Video on Demand) rights. That means Netflix has limited ad inventory and wouldn’t even be able to run ads against some of its own “Netflix Originals” unless the deals included the appropriate rights.

Gorman addressed this as well, saying Netflix is ​​actively working on the licensing issues.

“It is progressing day by day as we speak. We’re renegotiating agreements that we made a long time ago,” she said, adding that the “vast majority” of content that people watch regularly is available on the ad-level interface. Meanwhile, Netflix has about 85% to 95% of its content available at the ad tier, Gorman said.

Then there’s the real concern that, from a business perspective, offering a cheaper tier has the potential to cannibalize Netflix’s existing subscriptions as customers move to cheaper tiers more quickly, which isn’t offset by ad tier growth. However, Gorman downplayed those concerns, saying Netflix customers have historically stayed on the map they’re on right now.

The manager unfortunately couldn’t talk about adding the ad-supported product as Netflix is ​​ready to announce earnings, but said, “We’re pleased with the growth we’re seeing.”

Currently, Netflix’s Promotional Tier is available in the US, UK, France, Germany, Spain, Italy, Australia, Japan, Korea, Brazil, Canada and Mexico. The company has no immediate plans for expansion, but would aim to target a larger advertising market in the longer term. In addition to ads, Basic with Ads plan subscribers must deal with lower video quality (720p HD) and are limited to streaming from one device. They also cannot download content to their devices to watch offline.

Going forward, Netflix wants to do a little more than just serving typical ads, including things like dynamically inserting ads near moments that are relevant to marketers, individual show sponsorships, and more. It will later also allow marketers to target ads by age and gender.

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