The once untouchable Netflix audience is now reachable through advertising. The streaming platform recently implemented a new subscription tier that allows advertising, creating new opportunities for digital marketers. Though many brands are jumping right in, others could be hesitant because of critics warning the content will come second to ad revenue. It’s always a good idea to evaluate new advertising channels, such as this, before jumping in. So let’s do that now.
Netflix Paves the Way
Netflix was founded in 1997, revolutionizing the DVD rental market, allowing subscribers to rent and receive DVDs in the mail, and eliminating late fees. It was a huge success, but as time went on, there was a high demand for online-based entertainment. Streaming was introduced by the company in 2007 which enabled members to “instantly watch series and films,” feeding viewers’ desire for immediate gratification, being able to stream from whenever and wherever they wanted, from any device.
True to the Netflix innovative spirit, in 2022 they have addressed their declining subscriptions — almost 1 million left the platform in Q2 2022, by introducing a new subscription tier: the “Basic with Ads” option. This new tier was launched in November 2022, and offers lower pricing with the addition of 15- and 30-second ads before and during shows and movies. Viewers can expect a total of about five minutes per hour of advertising interspersed into their shows. (This doesn’t seem so bad for any of you who recall the old days of network TV and getting 22 minutes every half hour of programming, to allow for eight minutes of ads!) Netflix has said current members of the Basic, Standard and Premium plans will not be impacted, but this new system aims to attract more subscribers to the platform.
Advertisers will have broad targeting capabilities in order to more directly reach desired audiences, including the ability to focus the distribution of ads by genre, geographical region and other key distinguishing factors. Ads may also be restricted from playing on content that may not align with a brand’s image or values. Marketing through OTT media services presents a new, individualized approach for organizations to connect with consumers.
We say it’s worth a try! Netflix is offering a better content-to-advertising ratio than traditional TV, and brings with it the ability to tightly target who you want to reach, like most online advertising.
If you’d like to know more about advertising on non-traditional, online television (over-the-top, or OTT), read on below!
Understanding the Appeal of OTT
Over-the-top (OTT) media services allow users to directly access television shows and movies through the internet. Subscription-based streaming platforms, like Netflix, were embraced by consumers early on. The convenience of video-on-demand and personalized viewing were major reasons OTT viewership steadily continued to increase.
Similar platforms have since emerged in Netflix’s streaming footsteps, such as Hulu, HBO Max and Disney+. OTT media services eventually grew to surpass broadcast, cable, and satellite television in popularity. Consumer freedom to stream what they want and where they want makes it easy for brands to tailor the content shown on OTT platforms.
Younger audiences especially tend to lean away from “linear programming” and, instead, toward streaming. Pew Research Center found that 61% of adults between the ages of 18 and 29 primarily watch television and movies through OTT media services. This is a unique opportunity for advertisers to connect with young adults through such digital platforms.
Optimized Advertising for your Destination or District
Programmatic ads on OTT platforms can allow advertisers to easily buy and optimize data-driven, digital campaigns for specific audiences. Netflix’s recent announcement creates a new way for advertisers to target and connect with specific audiences. These internet-connected consumers can also conveniently click through OTT ads to learn more information or even take action. This kind of advertising typically sees a higher return on investment (ROI) than traditional media platforms.
OTT advertising is still quite new, and its overall efficacy is generally unknown. Some brands have jumped in with both feet, investing in Netflix’s promise of success before seeing much proof. However, it may be strategic to wait and analyze how early campaigns perform before involving your own organization. Evaluating initial campaigns can provide guidance for developing more effective ones in the future.
Here are some considerations we suggest before deciding to embrace OTT advertising:
- How could this campaign help serve your organization’s overall goals?
- Will OTT advertising help your organization better connect with target audiences?
- How effective have similar advertisements been for your competitors?
- Will this advertisement be cost-effective and how will success be measured?
Netflix’s new ad-supported subscription tier creates exciting opportunities for advertisers to explore and potentially connect with different audiences. There will be more to learn as the platform continues to grow, already seeing an unexpectedly slow start. Be sure to consider all relevant factors before deciding whether to delve into new advertising opportunities.
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