Netflix Is ‘Pleased With the Growth’ of Its Ad Tier So Far, Head of Advertising Says

Netflix is “pleased with the growth that we’re seeing” in its ad-supported tier since its launch two months ago, said Jeremi Gorman, president of worldwide advertising.

Gorman, speaking Friday at Variety’s Entertainment Summit at CES, declined to break out subscriber numbers (Netflix reports fourth-quarter 2022 earnings on Jan. 19). However, she said, “You would be able to see if I was concerned human.”

Gorman, who joined the streamer last year from Snap, where she was chief business officer, said the expectation for Netflix’s ad tier to be at least revenue neutral, if not positive.

Netflix Basic With Ads launched in the U.S. on Nov. 3 at $6.99 per month (30% less than the the regular Basic plan without ads, at $9.99 per month). The ad-supported package is available in 12 countries: Australia, Brazil, Canada, France, Germany, Italy, Japan, Mexico, South Korea, Spain, the U.K. and the U.S.

Early data from research firm Antenna, published last month, indicated that Netflix’s ad-supported tier is seeing a relatively slow uptake. Netflix has disputed the accuracy of Antenna’s data.

Netflix Basic With Ads excludes some popular TV series and movies, including “House of Cards,” “New Girl” and “The Good Place,” for which Netflix does not currently have rights to serve advertising. (Netflix says 5%-10% of total titles are unavailable in the ad tier, depending on market.) “The vast majority” of Netflix content is available on the ad tier, Gorman said.

Meanwhile, subscribers on the ad-supported plan, which serves up about 4-5 minutes of commercials per hour of content, can’t download titles for offline viewing. The service also is limited to a single 720p HD stream at a time (as is the case for Netflix Basic without ads).

Joining Netflix was “an extraordinary opportunity to reach consumers that advertisers haven’t been able to reach,” Gorman said. “It was kind of a no-brainer.” She’s been with Netflix for nine weeks so far.

Netflix is sticking with traditional 15- and 30-second ads for now, but longer term the company plans to broaden the ad formats to target viewers differently, Gorman said. For example, Netflix expects to introduce single-show sponsorships and target ads based on demographic data like age and gender.

Netflix’s ad-supported service is serving ads through a partnership with Microsoft and its Xandr platform. Gorman said there’s a “broad swatch” of advertisers in the initial mix for the ad-supported tier, including consumer packaged goods, retail and luxury marketers.

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