Netflix executives are positioning 2025 because the 12 months when the streamer’s advertising ambitions enter the “walk” phase of a crawl, walk, run roadmap that’s served as shorthand for its progress since an ad-supported tier was first implemented three years ago. Realizing that goal hinges on the corporate getting its recent in-house ad-tech stack right.
The announcement made around the corporate’s Q4 earnings report got here as Netflix exceeded its ad-revenue targets for the end-of-year period, an “exciting milestone,” in accordance with co-CEO Gregory Peters. Netflix doesn’t yet share revenue derived from advertising sales but indicated it has laid the suitable groundwork to succeed in its scale goals for advertisers this 12 months, with improving monetization the next area of focus.
“We’ve doubled our ads revenue year-over-year last 12 months. We expect to double it again this 12 months, so that ought to provide you with a way of the slope of monetization growth that we’re on,” said Peters on a call discussing the Q4 results with analysts.
In Q4, Netflix’s ad-supported plan represented over half of recent subscriber sign-ups within the territories where the corporate runs ads, an indication that the offering is appealing to budget-conscious consumers. Netflix is instituting its first price hike for the cheaper streaming option, which can go from $6.99 to $7.99 per 30 days within the U.S., together with similar increases for its costlier ad-free plans.
The Q4 earnings report impressed investors, with Netflix adding 19 million subscribers over the quarter, a brand new record. This is the last time Netflix will break out quarterly subscriber figures.
Users have flocked to the platform with the addition of more live sports content, including the blockbuster Mike Tyson vs. Jake Paul boxing match and two Christmas Day NFL games. Such prime-time programming is potentially serving as a draw for deep-pocketed brands that see traditional TV as on the decline.
“As streaming platforms like Netflix integrate more live sports programming, they create worthwhile, data-driven opportunities for advertisers to interact highly targeted audiences,” said Mike Seiman, CEO and founder of Digital Remedy, in emailed comments. “This shift is positioning Netflix as a significant player within the digital ad space, with its ad-supported tier expected to see significant growth in 2025.”
As Netflix tries to level up its sophistication to capitalize on a $25 billion marketplace for connected TV advertising, it’s wresting control over its own ad tech after previously relying on partners like Microsoft. Netflix has already launched its in-house tech stack in Canada and goals to roll it out to the U.S. in April.
“The biggest initial profit we’ve of using our own ads server is just enabling us to supply more flexibility, more ways of buying for advertisers, fewer activation hurdles, just improving the general buyer experience,” said Peters, who noted a bump in revenue growth in Canada.
Over time, Peters views proprietary ad tech as a way of higher delivering on areas like programmatic availability, ad targeting, measurement and campaign reporting. The timing of the U.S. debut coincides with the spring upfronts, a media-buying bonanza where publishers lock in large ad-spending commitments with brands for the 12 months ahead. Theoretically, higher ad levers on the back end may even improve the user experience, though the method could take some time to fine-tune.
“[We’ve] got a few years of constructing ahead of us. The road map is obvious,” said Peters. “We’re committed to iterative innovation and advertising just as you have seen us do in lots of other places.”
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