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Netflix & Amazon Prime Are Changing the Game for Advertisers: What You Need to Know

Netflix With Ads

You may have heard that Netflix will be rolling out a subscription tier that includes advertising. Netflix has always held on to being commercial-free as one of the major benefits to subscribers. However, with subscriber growth dwindling, they have begun to consider other revenue streams such as advertising. They have also found that customers are interested in an option that includes advertising for a $5 fee reduction. They expect to have 40 million such users by the end of 2023. netflix subscribers ad poll

You Want How Much?

cpm comparisons for major mediaAt launch, Netflix plans to charge advertisers $65 for every 1,000 impressions, or cost per thousand (CPM). This is close to triple the CPM for prime-time network television ($22). How can Netflix command these rates? An impression is an impression, right? Here is what Netflix has figured out, and how you can apply it to the advertising you are currently executing for your business. audience drop off graphWhen measuring impressions for network television, the measurement is of how many people are watching the show, not necessarily the commercials. As you can see from this chart, and probably experience yourself, people don’t always hang around for commercial breaks. It’s a good time to make a run to the refrigerator or see what else is on another channel.

Amazon Prime + NFL = $$$

This football season, for the first time ever, selected games will be streamed on Amazon Prime. If you watched the first game last week, it was a different experience. In addition to the multiple streams and new technology in place, the commercial viewing experience was different. When watching football on network TV on Sundays, you can flip around to the different games when they go to commercial. The NFL is so aware of this that they created a station called RedZone that does the flipping for you. It promises 6 hours of commercial-free football as it bounces you around to the different games. With Amazon Prime, you are locked into that app while watching the game, and captive to watching the commercials. Amazon Prime knows this, and is able to command higher CPMs because of it. Netflix is following this lead with their aggressive CPM pricing.

What This Means For You

You may not be purchasing ads on Amazon Prime or Netflix, but you can apply this same thinking to the marketing activities you are currently running. You are seeing a CPM number in your reports, but does that tell the whole story? Dig deeper. What counts as an impression? If your ad serves on the bottom of a website, but the viewer doesn’t scroll down to see it, does that count as an impression? If your video ad starts playing, but the viewer presses the skip button, does that count? As an agency, we are always looking to measure what matters the most to our clients. Whether that is growing a brand, creating a following, or driving traffic to an eCommerce transaction.  If you would like a complimentary review of your current advertising activities or any help understanding the metrics, please do not hesitate to reach out to us anytime. Our media buying team is in touch with the ever-changing landscape and would love to speak with you!
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