Just over a year after joining the company, Netflix announced that Jeremi Gorman would be leaving her position as global ad president. Gorman and Peter Naylor, both formerly of Snap, were hired by Netflix that August of 2022 to launch the streaming service’s ad-supported tier. Amy Reinhard, who had been the vice president of Netflix’s studio operations, has replaced Gorman in that position.
Amy Reinhard’s New Position
Amy Reinhard, who has been with Netflix for some time, has been chosen to replace Jeremi Gorman as the global ad president. Reinhard’s prior experience as a vice president of studio operations has prepared her well for this new role. Gorman has stated that she trusts Reinhard because she has seen first-hand the operational excellence and entertainment expertise that Reinhard provides. Brands hoping to capitalize on “The Netflix Effect” can look forward to some truly remarkable new possibilities thanks to Reinhard’s appointment.
Ad-Supported Model Used by Netflix
With the introduction of its ad-supported plan in the United States last November, Netflix is taking a bold new step forward. Netflix had resisted adding commercials to its programming in the past. However, as competition in the streaming space increases, the company has seen that advertising can help fuel revenue growth. The $6.99/month Netflix ad-supported plan has a small number of commercials. The platform is proceeding with caution when it comes to advertising, prioritizing the quality of the user experience over the pursuit of revenue.
Microsoft’s Agreement with Netflix
In order to expand its ad sales and ad tech capabilities, Netflix has joined forces with Microsoft. Through this partnership, Netflix hopes to improve its advertising capabilities by tapping into Microsoft’s knowledge in these areas. The partnership between the two organizations has not been without its difficulties. To further ensure ad verification and measurement, Netflix has enlisted the aid of third-party partners like Integral Ad Science and DoubleVerify. Netflix’s dedication to the honesty and high standards of its advertising offerings is made clear by these collaborations.
Netflix’s Advertising Strategy Going Forward
Netflix recognizes the potential in advertising, but it is not yet a major source of revenue for the company. At some point in the future, Netflix expects advertising to account for at least 10% of the company’s total revenue. Ads on the platform are being integrated into the service gradually so as to provide users with a smooth and unobtrusive experience. Netflix’s goal is to maximize revenue while minimizing negative user experience, so the streaming service is selective about the advertising formats it uses and the number of commercials it displays.
Ad Formats on Netflix
The current Netflix advertising formats are uncomplicated and easy to understand. The platform is careful not to bombard users with too many advertisements. Marketers like Google, Subway, AB InBev, and NYX Professional Makeup have all had success with campaigns on Netflix. Because there aren’t a ton of commercials on the platform, users can watch shows and movies without interruption while still being exposed to important ads.
Observations on Netflix’s Ad-Supported Plan
Within the first six months after introducing its ad-supported tier, Netflix attracted roughly 5 million subscribers. This demonstrates that there is interest in a freemium or ad-supported streaming service among consumers. Given the success of this tier, once the SAG-AFTRA strike ends, Netflix may decide to raise the price of its ad-free plan. The platform’s revenue will increase as a result of this strategy because more users will subscribe to the ad-supported, lower-priced tier.
Streaming Services, a Competitive Arena
Streaming services like Netflix aren’t the only ones curious about making money off of ads. Some online video services, like Amazon Prime Video, have announced that they will begin including commercials within their video content. In doing so, Amazon is significantly increasing its efforts to monetize its streaming service. Max and Disney+ are just two examples of the many streaming services that have begun placing an emphasis on ad-supported models as a means of monetization. Streaming services are under increasing pressure to innovate in order to remain profitable and keep up with the industry.
Netflix’s Advertising Plan Going Forward
Netflix’s move into advertising is a major shift in the company’s business strategy. The company is shaping up to be a powerhouse in the digital advertising industry as it improves its ad-supported tier and expands its advertising capabilities. Netflix has the potential to provide novel and efficient advertising for brands thanks to its extensive content library and massive global audience. The platform’s dedication to providing high-quality content and its cautious approach to advertising make it a formidable competitor in the rapidly developing streaming market.
See first source: Marketing Dive
FAQ
Why is Jeremi Gorman leaving her position as global ad president at Netflix?
Jeremi Gorman’s departure from Netflix’s global ad president position is not officially disclosed in the article. However, it’s mentioned that she, along with Peter Naylor, was hired to launch Netflix’s ad-supported tier. Her exit could be related to strategic changes or adjustments within the company.
Who has replaced Jeremi Gorman as global ad president at Netflix?
Amy Reinhard, who was previously the vice president of Netflix’s studio operations, has been chosen to replace Jeremi Gorman as the global ad president.
What does Amy Reinhard’s prior experience bring to her new role as global ad president at Netflix?
Amy Reinhard’s experience as a vice president of studio operations at Netflix has prepared her for her new role. Her operational excellence and entertainment expertise are expected to benefit Netflix as it explores advertising opportunities.
Why has Netflix introduced an ad-supported plan, and what is the pricing for this plan?
Netflix introduced an ad-supported plan to generate additional revenue in a competitive streaming market. The ad-supported plan costs $6.99 per month in the United States and includes a small number of commercials.
How is Netflix partnering with Microsoft to enhance its advertising capabilities?
Netflix has partnered with Microsoft to expand its ad sales and ad tech capabilities. By leveraging Microsoft’s knowledge in these areas, Netflix aims to improve its advertising offerings. The partnership is focused on enhancing ad verification and measurement.
What is Netflix’s long-term advertising strategy, and what percentage of its revenue does it expect advertising to account for?
Netflix expects advertising to eventually account for at least 10% of its total revenue. The company is gradually integrating ads into its service to maximize revenue while minimizing negative user experiences.
What are the current ad formats on Netflix, and how does the platform approach advertising to ensure a smooth user experience?
Netflix’s current ad formats are uncomplicated and easy to understand. The platform is selective about the number of commercials it displays to avoid overwhelming users. This approach allows users to watch shows and movies with minimal interruptions.
What has been the response to Netflix’s ad-supported plan, and how does it impact the platform’s pricing strategy?
Within the first six months of introducing its ad-supported tier, Netflix attracted approximately 5 million subscribers. This suggests consumer interest in an ad-supported streaming service. As a result, Netflix may consider raising the price of its ad-free plan in the future, which could increase revenue.
How does Netflix’s move into advertising impact the competitive landscape of streaming services?
Netflix’s entry into advertising is part of a broader trend in the streaming industry. Other streaming services, like Amazon Prime Video and Disney+, are also exploring ad-supported models to monetize their platforms. This competition drives innovation in the industry.
What potential does Netflix have in the digital advertising industry, and how is it positioned as a competitor in the streaming market?
Netflix, with its extensive content library and global audience, has the potential to become a significant player in the digital advertising industry. Its cautious approach to advertising and commitment to high-quality content make it a formidable competitor in the ever-evolving streaming market.
Featured Image Credit: Venti Views; Unsplash – Thank you!
