Streaming giant Netflix is reportedly cutting prices for ads on the platform.
According to three different advertisers who spoke to AdWeek, the streaming platform will begin charging advertisers $20 to $30 per CPM (cost per 1,000 views) for some of its ad inventory.
Over the last two years, Netflix has slowly lost advertising power, with rates dropping about $15-25 dollars per year according to a report from The Wall Street Journal.
This is another sign of the streamer's plans to shift to programmatic, with Netflix announcing during this year's upfront that it will build its own ad server by 2025.
Netflix also revealed plans to partner with ad tech firms Google's Display & Video 360, Magnite, and The Trade Desk this summer.
The firms each have sold Netflix ad inventory, with The Trade Desk selling it at significantly lower rates than others.
Netflix stated that programmatic inventory (sold by Netflix or third parties) will be sold cheaper than inventory bought via direct insertion orders (manually purchasing ads).
According to one source, Netflix is offering the following prices via The Trade Desk this month:
- 10-second ad, floor price of $15
- 15-second ad, floor price of $20
- 45-second ad, floor price of $37.50
- 60-second ad, floor price of $50
The source also mentioned that there would be additional charges to target audiences by specific age, gender, or genre preferences, as well as when advertising during streams of the top 10 most popular programs on the platform.
Programmatic advertising, in a nutshell, is a strategy that uses software to buy digital ad space.
It uses traffic data and online display targeting to drive impressions at scale, which results in faster return on investment (ROI) for advertisers.
Netflix Gets Competitive
Though Netflix has always charged higher rates than its competitors, the decision to lower prices may have been affected by Amazon Prime Video ad rates.
The Netflix competitor released its ad tier earlier this year, selling CPM for as low as $26 while offering viewers the option to opt out of ads by making an additional payment.
Due to this, Prime Video had an average monthly ad-supported reach of 200 million users in May. Netflix, on the other hand, only has an average of 40 million.
Earlier in January, Netflix removed its cheapest ad-free plan to enact a more ad-focused strategy.
Despite the many advertising setbacks, Netflix is still the largest streaming platform in the U.S., not including YouTube.
Editing by Katherine 'Makkie' Maclang
