New Netflix Ads Tier Comes With An Unpredictable Cost

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With the looming financial obstacles, customers are hunting all over to save money.

After getting customer pushback from raising its membership prices, Netflix rolled out its latest tier: Basic with Ads, in November 2022.

The advertisements tier subscription is $6.99 each month– nearly 55% lower per month than its Standard membership.

While the regular monthly cost is lower for consumers, the newest tier features surprise price.

Unpredictable Ad Timing

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

How is this comparable to other Connected TV subscriptions?

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

of ad time per hour for Netflix is equivalent to other streaming services, the lingering issue is when an ad will show. Advertisement timings are unforeseeable, which interrupts the user experience. The video material for ads is about what you expect compared to other streaming services. However the very same concern is at hand– when will this appear in a user’s enjoying experience on Netflix? According to Jay Peters from The Edge, a user’s ad

experience differs drastically between types of content taken in: Image credit: Jay Peters, TheVerge.com

As you can see from this example, the quantity of advertisements, along with the positioning of advertisements, is irregular, which leads to think that Netflix is checking to find the very best engagement for not just users but advertisers.

Specific Titles Come With A Premium Rate

The 2nd nuance with Netflix Basic with Ads tier comes from what shows and motion pictures are used at this level.

Similar to the unforeseeable ad experience, the readily available titles on the Fundamental tier appears incredibly scattered without a rhyme or reason.

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

Titles that aren’t available for Standard users will show a red padlock, indicating that it is restricted.

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 think that Netflix’s customer technique is to lure new users to the service or get previous customers to come back at a Fundamental rate level. This can assist grow and scale their subscriber numbers after toppling given that increasing rates.

When a user is in, restricting titles that may be a “should have” for users tries to show users the value of upgrading.

How Can Advertisers Forecast Connected Television Engagement?

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

In financial uncertainty, consumers might want to sacrifice their seeing experience to include advertisements while trying to save money. But if the viewing experience decreases, customers might be less likely to engage with Linked television advertisements.

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

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

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

So, what does this mean for advertisers?

Depending upon how you take a look at it, marketers could see this as:

  • An opportunity. If there are numerous duplicated advertisements, this might indicate that competitors is low on Connected TV/OTT. If this is the case, the chance for brand name awareness could be more cost-effective for you prior to the OTT market becomes too saturated.
  • An indication to stay away. If streaming services don’t fix the customer’s viewing experience, users are less likely to engage with ads. And if titles are being limited at a higher rate, consumers might churn off at a quicker rate than before. This, in turn, implies a high Expense Per Engagement for marketers. This might be a more dangerous investment for brand names with limited budget plans.

Summary

The latest Netflix price tier enables them to compete with other streaming services at a lower cost. It’s an excellent tactical carry on their part, and it opens up the OTT space for marketers to get in front of users who might not utilize other streaming services.

While the plan type is brand-new, Netflix (in addition to marketers) must monitor user engagement carefully and make any tactical pivots essential to make the most of engagement and subscriber growth.

While Netflix ads are open to bigger ad business, I expect them to present an internal advertising platform similar to Hulu sometime next year.

Have you attempted Linked TV/OTT ads yet? What has been your experience? Are they worth the investment?

Featured Image: Koshiro K/Best SMM Panel