Why ‘The Netflix Cup’ is a major step forward for streamer’s ad strategy

This week marks one year since Netflix debuted its ad-supported tier, and advertisers’ obsession with the streamer that spent most of its existence ignoring theirs has persisted despite the initial sticker shock, slow rollout of measurement and targeting products and small ad-supported user base. “Our goal isn’t just to offer the same products and tools the industry has come to expect—although we’ve made a lot of progress on that front over the last year,” said recently named Netflix President of Advertising Amy Reinhard in a blog post celebrating the anniversary. Rather, Netflix’s goal is “to build something bigger and better than what exists today,” Reinhard said. Check out the latest Ad Age events and award programs A centerpiece of Netflix’s vision for that future ad-topia is “The Netflix Cup,” the streamer’s upcoming live golf tournament starring athletes from its popular shows “Formula 1: Drive to Survive” and “Full Swing.” Peter Naylor, Netflix’s VP of global ad sales, previously announced that Nespresso and T-Mobile, among other unidentified brands, would be sponsors for the live event that will stream on Nov. 14. For advertisers, “The Netflix Cup” is particularly enticing because it will place brands not only in front of the platform’s ad tier subscribers but the entire Netflix platform—a potential 247.15 million global subscribers according to its third-quarter report. In comparison, Netflix’s ad tier reaches 3 to 3.5 million U.S. subscribers, per multiple media buyers. Netflix, which reports its ad tier users in monthly active users, now reports a reach of 15 million globally. Netflix declined to comment on its U.S. ad tier subscriber numbers. Related: Netflix enters live sports One agency buyer said clients have long been asking Netflix to sponsor specific programming, but they weren’t confident the streamer could deliver on audience guarantees at a show level. Live events that are able to be sponsored across tiers, however, offer a welcome fix, said the buyer, who also noted similar events would benefit Netflix’s sales numbers by drumming up competition over scarcity—this time due to limited sponsorship slots rather than lack of audience. “There was a sense for a while that consumers use streaming always on their time and when they want to do it,” said the buyer. “Consumers aren’t anti-live. They actually like live, and advertisers love it because there’s more social currency.” What’s next Netflix is bringing more opportunities for advertisers to show up in their favorite series as well, which it’s been teasing since its May upfront presentation. Netflix has launched “Title Sponsorships” for select series, starting with the most recent season of “Love is Blind,” which was sponsored by Frito-Lay’s Smartfood, and upcoming reality series “Squid Game: The Challenge” and the final season of “The Crown,” although Netflix did not reveal the sponsors for the latter two. It will also launch “Moment Sponsorships” that allow brands to align with local holidays. These join Netflix’s current set of products, which allow advertisers to target programming and viewers by genre, time of day, audience demo, mobile device and the streamer’s Top 10 list of currently most-watched shows. In Reinhard’s blog post, the executive reiterated the launch of binge ads, which inspired little excitement when Naylor announced them during an Advertising Week New York session, and that advertisers will be able to incorporate QR codes into their Netflix creative in 2024. Next on advertisers’ wish lists are increased transparency and scale for the ad tier. While buyers believe Netflix’s recent price hike for its ad-free tiers is a ploy to get more users to downgrade (its ad tier price remained the same), the audience size isn’t enough to justify the price for many (Ad Age previously reported that Netflix’s CPM, or the cost per thousand viewers, settled in the mid-$40 range during this year’s upfront negotiations). If the Netflix name were removed and “they were just the ad-supported user base they have now, I don’t even know that we would be looking at them very seriously,” said the first buyer. “But it’s because of their potential” that the agency’s clients have invested. A second buyer similarly said that the Netflix name trumps its product. “When Netflix came out with ads, we had people banging down the door … no matter how much it cost,” said the second buyer. They added that Prime Video, which is set to launch ads early next year for all subscribers that don’t pay an added fee, offers full capabilities and larger reach at lower pricing than Netflix, but “the advertiser enthusiasm isn’t there” for that Amazon offering like it is for Netflix. Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here

Why ‘The Netflix Cup’ is a major step forward for streamer’s ad strategy

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