New Netflix Advertisements Tier Comes With An Unforeseeable Price

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With the looming financial challenges, consumers are hunting all over to save money.

After receiving consumer pushback from raising its subscription rates, Netflix presented its newest tier: Fundamental with Advertisements, in November 2022.

The ads tier subscription is $6.99 monthly– practically 55% lower each month than its Basic membership.

While the regular monthly expense is lower for customers, the newest tier comes with hidden price.

Unpredictable Ad Timing

In the new Netflix Standard with Ads tier, users can expect around 4-5 minutes of advertisements per hour.

How is this equivalent to other Linked television subscriptions?

Image credit: Table developed by the author, November 2022. Sources of information are linked in the image. While the quantity

of ad time per hour for Netflix is comparable to other streaming services, the lingering concern is when an ad will reveal. Ad timings are unforeseeable, which disrupts the user experience. The video content for advertisements is about what you expect compared to other streaming services. But the same concern is at hand– when will this show up in a user’s enjoying experience on Netflix? According to Jay Peters from The Edge, a user’s ad

experience differs significantly between kinds of content consumed: Image credit: Jay Peters, TheVerge.com

As you can see from this example, the quantity of advertisements, in addition to the placement of ads, is irregular, which leads to believe that Netflix is evaluating to discover the very best engagement for not just users but advertisers.

Particular Titles Come With A Premium Cost

The second nuance with Netflix Basic with Ads tier originates from what programs and movies are used at this level.

Comparable to the unforeseeable ad experience, the offered titles on the Standard tier appears exceptionally scattered without a rhyme or reason.

The constraint should not come as a surprise to users, as Netflix revealed this back in July.

Titles that aren’t available for Basic users will show a red padlock, suggesting that it is limited.

The red padlock seems to be a passive “Call to Action” since users can click the padlocked title, which takes them to an upgrade screen.

I theorize that Netflix’s customer strategy is to attract new users to the service or get previous customers to come back at a Fundamental price level. This can help grow and scale their subscriber numbers after toppling because increasing rates.

Once a user is in, restricting titles that may be a “should have” for users tries to show users the worth of updating.

How Can Advertisers Projection Connected TV Engagement?

Connected TV ads aren’t new to consumers. Brands invested over $400 million in ads on Hulu alone in 2021.

In financial unpredictability, customers may want to sacrifice their viewing experience to consist of advertisements while attempting to conserve cash. However if the viewing experience diminishes, consumers might be less inclined to engage with Connected television advertisements.

While it’s prematurely to outline Netflix Fundamental with Advertisements, a common gripe from consumers on other streaming services is the absence of range in ads.

Back in 2021, Morning Consult performed a survey to consumers about their experience with streaming services ads. According to the survey:

  • 69% of users believed the ads they got were recurring
  • 79% of users were bothered by that experience

So, what does this mean for marketers?

Depending on how you look at it, marketers could see this as:

  • An opportunity. If there are a lot of repeated ads, this could imply that competition is low on Connected TV/OTT. If this holds true, the chance for brand name awareness might be more economical for you prior to the OTT market ends up being too saturated.
  • An indication to keep away. If streaming services don’t fix the consumer’s viewing experience, users are less likely to engage with advertisements. And if titles are being limited at a greater rate, customers may churn off at a much faster rate than in the past. This, in turn, indicates a high Expense Per Engagement for advertisers. This could be a more dangerous financial investment for brands with restricted budgets.

Summary

The latest Netflix cost tier enables them to take on other streaming services at a lower rate. It’s an outstanding tactical move on their part, and it opens up the OTT area for advertisers to get in front of users who might not utilize other streaming services.

While the strategy type is brand-new, Netflix (along with marketers) should monitor user engagement carefully and make any tactical pivots essential to optimize engagement and customer growth.

While Netflix advertisements are open to bigger ad business, I expect them to present an in-house marketing platform similar to Hulu at some point next year.

Have you tried Connected TV/OTT ads yet? What has been your experience? Are they worth the financial investment?

Featured Image: Koshiro K/Best SMM Panel