According to some ad users, Netflix Inc. is trying to charge businesses premium rates to advertise on its coming ad-supported platform, a sign that the streaming giant expects to generate a lot of interest from businesses that have long connected with its audience.
Last week, some advertisement customers met the executives from Netflix and Microsoft Corp., which is providing the technology to permit the placement of video ads on Netflix. According to the users, Netflix intends to charge advertisers around $65 for every 1,000 viewers they contact using a metric known as cost per thousand (CPM). The users said that this is far higher than what most other streaming platforms charge.
To find innovative ways to increase revenue and attract more budget-conscious customers, Netflix is launching a lower-cost, ad-supported tier. Netflix made several moves since declaring its openness to advertising in April 2022, a significant shift for a company that has long marketed itself as a commercial-free refuge. Some of the ad consumers claimed that Netflix informed them that an ad-supported model will be introduced on November 1, 2022. Netflix announced in July 2022 that it plans to launch the new tier early in 2023.
To ensure that no brand promotes itself too much on the site and other individuals end up seeing the same advertisement frequently, some of the customers said that Netflix should cap the amount every brand could spend annually on its platform at $20 million. In a statement, Netflix said, “We are still in the early stages of deciding how to offer a lower-priced, ad-supported tier.” No decision has been taken. Notably, the paid memberships of Netflix declined marginally in the second quarter (August 2022) over that in the first quarter (April 2022).
Customers who saw the advertisements expressed disbelief that Netflix would charge such a high price for advertisements on a new platform. However, they noted that it was not unusual for first participants in the streaming market to initially seek out high prices before subsequently negotiating lower prices.
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