Netflix initially asked for a 'soft $65 CPM,' or cost per thousand impressions, but sources say many advertisers aren't willing to pay that much
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Netflix is moving up the timeline for the debut of its cheaper, ad-supported plan to November — in order to get out before the Dec. 8 launch of the Disney+ tier with advertising.
In July, Netflix told investors that it was targeting the launch of the ad-supported plan “around the early part of 2023.” But now, Netflix’s ad-supported is set to go live Nov. 1 in multiple countries, including the U.S., Canada, U.K., France and Germany, according to industry sources who have been briefed on the streamer’s plans. That would be a little over a month before Disney+ Basic, priced at $7.99/month, hits the market in the U.S.
Netflix declined to comment. “We are still in the early days of deciding how to launch a lower-priced, ad-supported tier and no decisions have been made,” a company rep said.
Sources confirmed the new Nov. 1 launch date, which was previously reported by the Wall Street Journal. Netflix and its exclusive ad partner, Microsoft, have requested ad buyers submit initial bids next week, with a “soft $65 CPM” — the cost per thousand views — meaning that the company is open to negotiating the ad rates. That’s well above industry CPMs of sub-$20. Sources speculate Netflix’s request for proposals from ad buyers will function as a Dutch auction, with the company looking to see what the market will bear.
Regarding the starting $65 CPM that Netflix and Microsoft have floated, one ad buyer said, “My guess is they won’t get that.” The feedback from brands is “very much wait-and-see,” the source added. “At anything above $20 [CPM], the feeling is, ‘Let’s let other advertisers wade into that pool first.'”
Netflix is asking for a $10 million minimum commitment in annual ad spending from agencies right now, according to one source. The company wants to lock in ad buys by Sept. 30 to meet the Nov. 1 launch date. Netflix has told ad buyers it expects to have about 4.4 million customers worldwide on its ad-supported plan by the end of 2022. Netflix hasn’t settled on retail pricing but is reportedly looking at between $7-$9 per month.
To head up its advertising business, Netflix recently poached Snap’s two top ad execs — chief business officer Jeremi Gorman and VP of sales Peter Naylor.
Initially, Netflix’s ad-supported service will not have any third-party attribution. It also will have limited targeting ability: Advertisers will be able to buy against Netflix’s top 10 most-viewed TV series and against some content genres. But for the first phase of the ad tier’s rollout, Netflix will not serve ads based on geography (except by country), age, gender, viewing behavior or time of day.
As previously reported, Netflix’s ad-supported tier will have an ad load of about 4 minutes per hour for series. For movies, the streamer will run pre-roll ads, according to sources. Netflix is setting frequency caps (how often an ad spot may be served to individual viewers) of one per hour and three per day per viewer, which are relatively low by industry standards.
Variety's Todd Spangler contributed to this post.