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Netflix's AVOD Rollout

Updated: Nov 2, 2022

By Lauren Ridgley

Netflix just revealed a bit more about their rollout for advertising-based video on demand (AVOD) and their tiered subscription service. As an agency that buys our fair share of AVOD OTT & CTV ads, we've been eagerly awaiting more information.

Here are a few takeaways.

  1. Prepare to spend. The cost per thousand (CPM) is expected to be more than $65 and they plan on hiking that rate down the road. That's double what other AVODs are charging on a CPM basis. Is their audience twice as valuable? Regardless of the answer we bet major brands will be quick to enter this space.

  2. You're paying for less clutter. With just 2 minutes of ads per hour they are limiting the number of ad units, which is better for the advertisers who do pony up that steep CPM. However, other tiered AVODs like Hulu already do this while charging considerably less.

  3. It's a small world. The platform anticipates 500k monthly active users (MAU) when it launches. For comparison sake, the US has 140 million AVOD viewers. That's a drop in the bucket and will have to grow quickly or they'll have serious frequency issues. For its early days we anticipate only national advertisers will be able to reach viewers at scale.

  4. We'll take your word for it? The company is currently not allowing any third party measurement. This isn't surprising given how close to the vest Netflix is with viewership data, but we anticipate strong pushback from advertisers who want transparency.

  5. The competition is watching. If Netflix manages to lock up advertisers at a $65 CPM we anticipate others will begin hiking their rates - and even programmatic CPMs will start creeping up.

Because the CPMs and the low MAUs we imagine the early days of Netflix ads will be direct-buys only. (This is also supported by the fact they won't allow third party measurement).

The only information we're still hoping to learn is data targeting capabilities. If the company isn't allowing third party measurement - will they allow third party data targeting? More to learn and we'll be watching it unfold!

- Lauren

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