Netflix redefines streaming wars with pioneering ad tech leap

During its Wednesday Upfronts presentation, Netflix introduced its advertising technology platform eighteen months after the company debuted in the advertising market. This strategic development places Netflix in competition with other industry behemoths with ad servers, like Google, Amazon, and Comcast.

According to information provided by TechCrunch, this represents a significant milestone that could fundamentally alter the streaming giant's advertising approach. Initially partnering with Microsoft to develop its advertising technology, Netflix has now declared its full autonomy in this domain.

The decision to develop in-house advertising technology presents new opportunities for Netflix to craft more personalized and tailor-made advertising experiences for its vast audience of over 270 million subscribers. Amy Reinhard, president of Netflix's advertising division, highlighted a specific objective driving these efforts. They aim to ensure that advertising strategies are carried out with the same excellence that has established Netflix as a leader in streaming technology.

Reinhard emphasised that striving for an exceptional user experience is the company's top priority. Currently, Netflix is conducting comprehensive consumer research to gain a competitive edge. The company announced that owning its platform will make its advertisements less generic and more experimental. One instance of this will be "episodic" campaigns that narrate a story rather than inundating the user with repetitive messages.

During its presentation, Netflix also shared plans to enhance its advertising capabilities. According to the announcement, this will include collaborations with partners such as The Trade Desk, Display & Video 360 by Google, and Magnite. This indicates that despite developing its advertising technology, Netflix remains open to partnerships with external platforms.

The company also highlighted during the presentation that its ad-supported subscription plan has succeeded. Globally, it has attracted as many as 40 million active users per month. This milestone was reached within just six months of launching this plan. This achievement casts new light on the potential of advertising in streaming. Meanwhile, realising this potential, Netflix is proactively advancing to maximise it.

Netflix launched its ad-supported subscription plan, "Basic with Ads," on November 3rd, 2022, in the United States and 11 other countries. Then, in July 2023, it discontinued the cheapest ad-free plan in the US and UK for both new and returning users. Consequently, they were compelled to choose between the more expensive option without ads and the cheaper plan with ads. Current subscribers can still use the basic plan without ads, as long as they do not decide to switch plans or cancel their subscriptions.

Netflix intends to continue phasing out the basic plan without ads in other countries. This process started in the US, UK, and Canada, but the company has indicated its plan to roll out this change to additional markets. By 2024, it is expected to be introduced in Germany, Spain, Japan, Mexico, Brazil, and Australia. This decision aims to boost the number of users opting for ad-supported plans. They constitute 40% of all new registrations in the countries where this plan is available.