Netflix’s ad plans are starting to take shape, with advertisers saying the streaming giant is offering limited targeting capabilities, the inability for brands to select the programming they want to advertise in, as well as a price tag that surpasses that of every other streaming platform. 

Netflix has been exceedingly tight-lipped on its developing ad-supported subscription tier, which multiple agency buyers have told Ad Age is the result of not having answers rather than an unwillingness to answer them. Now, the streamer has begun pitching its coveted inventory via its ad tech partner Microsoft, with what sources say is an overpriced, underdeveloped product—potentially coming sooner than previously announced.

Despite announcing an early 2023 launch date during its recent second-quarter earnings call, multiple agency buyers have said Netflix is eyeing a November debut for its ad tier in an effort to launch before Disney+ debuts commercials on Dec. 8.

In its initial offering, brands won’t be able to pick which programming they advertise against, according to two media buyers. Netflix has not yet divulged which of its programming will be available to advertise in as it finalizes its licensing deals.

“We are still in the early days of deciding how to launch a lower priced, ad-supported tier and no decisions have been made. So, this is all just speculation at this point,” a Netflix spokeswoman said.

Earlier this week, the streamer hired Snap executives Jeremi Gorman, who will become president of worldwide advertising, and Peter Naylor, VP of advertising sales, to lead its new offering. The duo will start at Netflix in September. 

Netflix will offer ad packages based on genres of programming, of which the streamer has 20, averaging a reach of six genres per viewer, Co-CEO Ted Sarandos said at the Cannes Lions International Festival of Creativity this summer. The packages will also be offered across Netflix's “Top 10” list—with limited audience targeting capabilities, buyers said. 

Netflix is also not expected to have third-party measurement to verify its audience metrics—or even provide them. One buyer said that they will “have impression counts through the Xandr platform,” but that currently Netflix doesn’t have the capability to share reach and frequency data for campaigns.

Initially, Netflix will sell 30- and 60-second commercials, with frequency capped at one per hour. This means that the same ad can’t air more than once per hour, necessitating a higher volume of creative from each advertiser looking for high saturation on the platform. 

Sources confirmed previous reports that Netflix’s ad tier will refrain from serving advertising to kids’ profiles, and that the only other category specifically barred from running ads on the platform is rival streamers. Previous reports have also stipulated an ad load of about four minutes per hour.

Netflix’s initial price tag for ad inventory is around $60 for the cost to reach a thousand viewers, an industry standard known as CPMs. Comparatively, Disney+ reportedly made deals on CPMs around $50. Netflix is asking for a minimum investment from media agencies of $20 million, although one buyer noted that the ask “seems very negotiable.” Netflix is looking to close dealmaking by the end of September, although a second buyer said they anticipate negotiations to last well into November as the company is forced to concede on its pricing.

But Netflix is setting what buyers describe as conservative expectations for how many subscribers marketers can reach. Spencer Neumann, Netflix’s chief financial officer, told investors on its last earnings call that “it’s not like all of a sudden all folks on ad-free Netflix are going to join advertising Netflix.”

Sources told Ad Age that the streamer expects its ad-supported tier to draw about 500,000 subscribers by the end of 2022, compared to its total subscribership of about 220 million, with numbers expected to grow exponentially by the end of 2023. 

“It's a vanity play for our advertisers—there will be some advertisers that want to be there first,” one buyer said. “Practically speaking, you’re going to get better reach and better performance on every other advertising-supported streaming platform almost—for the right price.”