Netflix to launch in-house adtech platform by the end of 2025

Netflix had earlier signed Microsoft as its exclusive global advertising technology and sales partner in July 2022.

Netflix will launch an in-house advertising technology platform by the end of 2025, a top executive said on May 16, as the streaming giant seeks more control over how it shows ads on its platform.

"Bringing our ad tech in-house will allow us to power the ads plan with the same level of excellence that’s made Netflix the leader in streaming technology today" Amy Reinhard, Netflix's president of advertising said.

"We’re being incredibly strategic about how we present ads because we want our members to have a phenomenal experience. We conduct deep consumer research to make sure we stay ahead of the competition, bringing opportunities that are better for members and better for brands.”

Netflix in July 2022 signed Microsoft as its exclusive global advertising technology and sales partner.

Microsoft will continue as a programmatic advertising partner but will now be joined by firms such as The Trade Desk, Google's Display and Video 360, and Magnite.

Netflix said the new platform will give advertisers new ways to buy ads, leverage audience insights and measure impact.

The company also named new partners that advertisers can use to measure and verify the impact of their campaigns. These include Affinity Solutions, DoubleVerify, EDO Inc, Integral Ad Science, iSpotTV, Kantar, Lucid, NCSolutions, Nielsen and TVision.

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Netflix's growing ad-supported tiers

The move comes as Netflix is seeing a significant growth in its budding advertising business. Its cheaper ad-supported tier now has 40 million global monthly active users, nearly double of 23 million in January.

Netflix, which offers ad-supported service in 12 markets, said over 40 percent of the signups now come from the ad-supported plans.

The company said more than 70 percent of its ad-supported members watch for more than 10 hours a month, which, it claimed, is 15 percentage points higher than the nearest competitor. More than 50 percent of Netflix’s ad-supported members watch content on the platform for more than 20 hours a month, it said.

"Netflix members also pay even more attention three hours into watching than they do when they first start. And because they do, they’re around twice as likely to respond to an ad compared to other streaming services and linear TV," the company said.

The streaming service earlier stated its intention to scale up its advertising business and attract more users to its ad-supported tiers to make it a more meaningful contributor to the business in 2025 and beyond.

Netflix's advertising pivot

Netflix introduced its ad-supported subscription plan in November 2022.

This marked a major departure from the company's earlier stance against advertising on the platform. The shift, however, came in the backdrop of the service posting its first quarterly subscriber loss in more than a decade in April 2022.

To grow the ad-supported tier, Netflix plans to retire the basic plan in a few countries where it offers the ad-supported tier, starting with Canada and the United Kingdom in Q2 2024.

In January, Netflix co-CEO Greg Peters said the company would launch more advertising products, improve measurement and increasingly build the "capability to be better partners with advertisers and serve their needs".

That said, Netflix doesn't seem to have any plans to offer its ad-supported tier beyond the 12 countries in the near term. In January, Peters said the countries where it is currently offering these plans represent about 80 percent of the global ad spend.

"So we're already working in the spaces where there's the majority of opportunity...We got a ton of work ahead of us on just getting to the level of maturity and impact to the business from the countries that we're operating in today," he had said.

Live programming expansion

Over the past year, Netflix has also been expanding its live programming to broaden its offerings and fuel its advertising business.

On May 16, the service said it would stream two National Football League (NFL) games on Christmas Day (December 25) this year and at least one Christmas Day game in 2025 and 2026.

In January, Netflix acquired exclusive rights to World Wrestling Entertainment (WWE)'s flagship weekly programme Raw and other programming as part of a long-term deal. This marked the streaming service's first big foray into live sports after testing the waters by streaming several live events in the past year.

This includes comedy specials such as the Chris Rock stand-up special in March 2023, the disastrous Love Is Blind reunion special in July 2023, a golf tournament featuring professional golfers and Formula 1 drivers called the Netflix Cup in November 2023 and the 30th edition of the annual Screen Actors Guild (SAG) Awards in February.

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