Netflix, Pushing Into AVOD Fray, Plans New Ad Formats, Sponsorships

Netflix is ready to use “The Crown,” “Squid Game” and other signature series to take ad dollars from rival streamers.

The company says it will start to offer so-called “title sponsorships” to advertisers ready to align with the new reality series “Squid Game: The Challenge” and the final season of “The Crown” as part of its bid to accelerate the utility of its ad-supported tier.

“We want to shape the future of advertising on Netflix and help marketers tap into the amazing fandom generated by our must-watch shows and movies,” says Amy Reinhard, newly installed as president of advertising at Netflix, in a prepared statement.

Netflix is making a new bid to lure Madison Avenue to its offerings even as many ad buyers say the company has yet to generate the scale necessary to win over their clients’ ad dollars.

To be sure, Netflix says its ad-supported tier has won over 15 million monthly active users across the globe. In an October letter to shareholders, Netflix said advertising-tier subscriptions accounted for approximately 30% of all new sign-ups in the 12 counties that supported that platform. Netflix said it was “working with brands to create formats they will value, in particular the ability to connect with highly conversational and culturally relevant programming.”

As recently as this past summer, executives suggested that the Netflix ad-tier subscriber levels in the U.S. were too small to meet guarantees the company might have made to early sponsors. In late October, Netflix said ad-sales chief Jeremi Gorman, a veteran who was lured from Snap, was leaving the company, replaced by Reinhard, who had previously led studio operations.

Starting in the first quarter of 2024, Netflix will offer advertisers across the globe access to a new “binge ad” format that gives viewers who watch three consecutive episodes the chance to view a fourth without commercial interruption. Viewers will be informed that a certain sponsor is giving them the chance to watch an episode without interruption. Netflix also plans to give advertisers the ability to use QR codes in commercials starting in early 2024.

The company plans to offer sponsorships that can be tied to a specific title, a thematic moment or a live stream. PepsiCo’s Frito-Lay, for example, has aligned its Smartfood popcorn snack with the most recent season of the reality series “Love Is Blind.” Netflix is seeking sponsors for the reality series “Squid Game: The Challenge” as well as the final season of “The Crown.”

So-called “moment” sponsorships will let advertisers connect to such things as local holidays. They will become available at the end of this year in the US and will roll out globally in 2024.

T-Mobile and Nespresso will, along with others, help sponsor a new live sports event called “The Netflix Cup,” which has celebrity athletes take part in a golf tournament.

Many of the new Netflix features are already employed by rivals, including Disney’s Hulu and Warner Bros. Discovery’s Max.

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