Some advertising executives who have been briefed by Netflix on the company’s plans to introduce an advertising-supported tier of service are questioning whether the streamer has realistic expectations for the ad revenue it can expect to generate.
It is rumored that Netflix may launch the new service on 11/1, less than two months away. The company has begun making the rounds with ad buyers to pitch the placement opportunity and is said to be quoting rates as high as $65 CPM, the cost for an advertiser to have an ad shown to 1,000 viewers. This rate is expensive, comparable to advertising during the Super Bowl, and has taken many experienced ad execs by surprise. For its part, Netflix is denying an imminent launch of this service and is sticking by its originally-reported launch date of July 2023, and the company has not yet publicly announced its advertising rates.
Reacting to these ad rate rumors, some are claiming that Netflix is out of touch with the advertising market while others see it as an opening position in a negotiation, which will eventually come down to a reasonable CPM.
Success with an ad-supported service is crucial to future success at Netflix, as the ever-increasing costs of operating a global streaming empire are significantly more income than it can earn from monthly subscription fees.