Netflix has announced the development of its own advertising technology platform.
This move, revealed during its Upfronts presentation, will impact the initial partnership between Netflix and Microsoft for ad tech solutions.
With an in-house platform by the end of 2025, Netflix aims to personalize ads for its large user base and compete more effectively with established ad giants like Google and Amazon.
“Bringing our ad tech in-house will allow us to power the ads plan with the same level of excellence that’s made Netflix the leader in streaming technology today,” said Amy Reinhard, Netflix’s president of advertising.
This focus on user experience is evident in Netflix’s plans to potentially move away from generic ads, exploring “episodic campaigns” that tell a story across multiple placements.
The ad-supported tier launched in late 2022 has seen explosive growth, having 40 million global monthly active users – an increase from just 5 million within six months of launch.
This is further highlighted by the fact that over 40% of new sign-ups in regions with the ad tier opt for that option.
To enhance its ad offerings, Netflix is expanding its programmatic buying partners to include The Trade Desk, Google’s Display & Video 360, and Magnite, joining Microsoft.
The streaming giant has also partnered with ten companies including Nielsen and Kantar to provide advertisers with solid campaign measurement and verification tools.
Netflix emphasizes its audience’s high engagement, with over 70% of ad-supported plan members watching for more than 10 hours per month – higher than competitors. This, combined with the cultural influence of many Netflix shows (“The Netflix Effect”), makes the platform a prime one for advertiser engagement.
While Netflix asserts great subscriber growth and watch time metrics, it plans to stop reporting quarterly membership numbers and average revenue per user (ARM) in 2025.
The streaming giant believes metrics like revenue, operating margin, and free cash flow better reflect their financial health as a company generating good profits.
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