Now that Basic with Ads has launched, what’s next for Netflix?
Netflix has started rolling out its long-awaited Basic with Ads tier in 12 countries. During The Drum’s Media Summit, we ask top marketers and buyers whether the streaming giant has done enough to attract top brands and consumers.
Costing roughly half the price of a standard subscription, the Netflix Basic with Ads tier is now being rolled out and will be available in Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the UK and the US by November 10. The ad-supported subscription tier will cost $6.99 (£4.99) a month and, due to licensing agreements, grant access to 90-95% of Netflix content.
Media buyers have previously expressed doubt over the product that has been quickly built by the streaming giant. But since then, we have had a better understanding of what the product will look like.
The ad load will average four to five minutes an hour, with the spot being either 15 or 30 seconds in length. Ads will play before and during series and films. Although new-release films will only have pre-rolls, titles that have been on the services for a while have the potential to have mid-rolls. There will also be tight frequency caps – a common complaint with CTV advertising.
Speaking at The Drum’s Media Summit, John Manning, client investment director at Starcom, says the launch of the scheme was ”hugely exciting for advertisers”. He tempers that, however, adding: ”We need to see how consumers will uptake this proposition. If Netflix was to transfer all of its inventory overnight it would be a huge opportunity, but at the moment we don’t know how many people will use the ad tier.”
While Netflix’s ad tier is cheaper than a premium subscription, Manning wonders if the small saving is enough to entice audiences who are keen to cut prices. ”It does offer an audience, though, which we have seen declining slowly in TV, so if it can get it right then there is a real opportunity.”
To properly appease marketers, the service has to scale to a worthwhile size where global segments can be reached. And then there’s the measurement question: for its high CPMS, will Netflix deliver a comparable service to that offered by traditional broadcasters?
The streamer joins Disney+ in being audited by Barb in the UK, which will lay bare its penetration in the region. With season 5 of The Crown launching soon, we know the impact we can expect from its top properties.
As of November 1, we know that the most-watched show on Netflix is the Watcher, the grisly drama created by Ryan Murphy that accumulated 500,000 views. While that’s a respectable number, it was dwarfed by an airing of the Great British Bake Off that enjoyed 4.3 million views.
Manning hopes that, via Barb, there would be a breakdown of which viewers accessed the show in the ad-funded tier versus subscriptions. ”It’s useless if we don’t have that delineation.”
Our TV experts say they will also be watching closely to see what the streamer does around product placement – a space in which Netflix would have to scale up significantly to make a material difference to the books.
Speaking more broadly about streaming, Manning says: ”Brands were hungry to get on these platforms. They are notoriously difficult to get into. We spoke to Amazon to break down the barrier to get content on there. It was a learning experience for both of us.”
Samantha Glynne, an executive at UTA entertainment and culture marketing, tells us that the draw of Netflix is strong. ”Every time we work with a brand, they ask to be a part of Netflix and be a part of culture. But you need the data – what is the next big show? What creators are resonating?”
With comprehensive packaging around product placement, sponsorship and in-stream ads, brands cut out-punch their competitors in this buzzworthy platform, says Glynne, who adds: ”UTA had been trying to normalize rideshares for Lyft with various different shows, including Stranger Things season 2. It wasn’t in the show because it was set in the 80s, but it was around the show, creating spooking cars that elevate the IP.”
In short, Lyft became part of the marketing efforts for the show and both brands saw the uplift. So, could Netflix better integrate brand partners into its marketing flywheel rather than the content itself?
To help deliver this new ad tier, Microsoft was chosen as a partner. Netflix will only capture gender and date of birth at sign-up and said it would not be using that data at launch. It added that Microsoft will only be able to use the data and it will not build profiles for any other company.
The streamer is reportedly charging a CPM (the price of serving an ad to 1,000 people), with a $20m minimum spend. Marketers have taken umbrage at these fees, especially considering it is commanding such high rates before the proof of product. The Drum understands that the $65 is a launch price, which would reduce after the rollout.
For more media analysis, check out The Drum’s Media Summit broadcast on November 2 and 3. And be sure to subscribe to our weekly Future of Media newsletter.