Netflix Advertising: Microsoft to be New Advertising Partner

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Here come the ads. Netflix is pairing up with Microsoft for a technology partner as the streaming giant pivots to a cheaper ad-supported tier, Netflix advertising. Netflix has long withstood the call of putting ads on their service, but recent growing pains are forcing them to reconsider.

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Months of jockeying between Netflix, Microsoft, and Google ended recently as Netflix gifted Microsoft the final rose in its quest to deliver ads to the streaming service.

Microsoft now joins Netflix as its “global advertising technology and sales partner” to help the service create the necessary tech infrastructure for a long-rumored ad-supported tier. The introduction of Netflix ads marks a significant shift in the company’s strategy as it looks to generate revenue from a new source.

Netflix’s chief operating officer believes that Microsoft has shown itself to be a good option for supporting its advertising needs. Their history and track record indicate that the partnership will give users the privacy protections they desire and the flexibility required for ongoing innovation.

Microsoft praised the partnership in their statement as well. In addition to consumers having more options for the content Netflix provides, the partnership will also benefit marketers. Thanks to Netflix’s platform, those seeking to use Microsoft for their advertising will now have a broader audience.

Netflix has not yet revealed the pricing details for the new ad-supported tier, but it has pledged it will be less than the current $15.49 a month plan. However, the company did reveal that a “vast majority” of its content would be available with the ad-supported tier.

Netflix has long withstood the call of putting ads on their service, but recent growing pains are forcing them to reconsider.

Recent Netflix Woes Are Behind Push for Ads

Netflix made an effort to stay away from ad-supported models until recently. However, the stock prices dropped due to subscriber losses and growth concerns. The company has also raised streaming service prices in the past several years.

The actions have compelled the business to think about an ad-supported business model to help stem the flow of members quitting the site.

In April, Netflix announced an ad-supported tier but stopped short of saying when it would launch. Instead, the company chose a nebulous “early 2023” timeline for the service’s launch date.

As Netflix ads become a reality, the company hopes to mitigate subscriber losses and stabilize its stock prices.

Consumers Are Not Bothered By Ad-Supported Tiers

In a new study, almost 3,000 LG smart TV users in the US polled by a healthcare advertising technology business showed that 64 percent of users preferred adverts over paying more for streaming.

Instead of boosting fees for people on a tight budget, several popular streaming services have already switched to an ad-supported model.

Several services, like Discovery+, Peacock, Paramount+, HBO Max, and Hulu, offer ad-supported tiers rather than charging them more. In addition, the advertisements are targeted and shorter than a typical 30-second TV ad based on internet watching patterns.

Customers can choose between an ad-supported tier on Hulu for $6.99 per month and an ad-free tier for $12.99 per month. In addition, HBO Max has recently launched a $9.99 per month ad-supported option for members.

Source: AdAge

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