Amid Economic Turmoil, Netflix Expects Ad Revenue Growth
Netflix executives said that the unsteady economy in the U.S. wasn’t changing the company’s expectations that it will double its ad revenue in 2025.
During its first-quarter earnings report Thursday, Netflix didn’t break out revenues for its still relatively new advertising sales operation. But company executives said that the roll out of Netflix’s in-house ad tech platform was on track and would deliver benefits to advertisers.
Co-CEO Greg Peters told analysts on the Netflix’s earnings video that the company isn’t seeing any signs of softness in its dealings with media buyers as the upfront market approaches.
“Actually, to the opposite, we're seeing some positive indicators from clients as we approach our upfront event,” Peters said. Because Netflix is still a relatively minor player in the ad market at this point, “that smallness probably provides us some insulation to market shifts right now.”
Netflix has been rolling out its own ad suite, including recently in Canada and the U.S. So far, their performance has been consistent with expectations, Peters said.
“We're learning and improving quickly now, based on the feedback we're getting from having those live and operating them,” he said.
When Netflix started selling ads, it worked with Xandr, which was acquired by Microsoft. Having its own ad-tech operation lets Netflix be more flexible with advertisers, giving them more ways to buy ads from the streamer, Peters said.
Having a first-party ad-tech platform will also enable Netflix to make more inventory available programmatically, deliver enhanced targeting, use more data sources and provide better measurement and reporting on campaign performance.
“Those are all things that we've got in the works. Some of those have been delivered already in some of the territories, and those will come over time,” Peters said.
In the U.S., Netflix recently enabled advertisers to do more significant targeting, based on their own onboarded audiences, on Netflix’s modeled audiences and audience segments from a set of third-party vendors. .
The Netflix data about its subscribers used to target ads includes information about their life stage, interests and viewing mood.
“We do have an ambition to achieve that same level of sophistication and maturity capability that we did on the personalized recommendations in the ad space. That means matching the right ad with the right audience, the right viewer, and the right title. And we think putting those three things together drives superior campaign outcomes for advertisers. We think it's a better experience for members. So, it's win, win, win,” Peters said.
In 2026 Netflix expects to be able to do more data targeting capabilities and more measurement functionality globally, he said. In 2027 the company will make , focused investments at a higher order in data capabilities, such as ML-based optimizations, advanced measurement, advanced targeting, and the ability to develop new ad formats.
Building its ad-tech in house also “enables us to have more control to create a higher quality ad experience for our members,” Peters said. “These are things that are really important like increasing ad relevance, which is just good for everybody in the whole ecosystem.
Peters said said that the volatility of the economy hasn’t affected Netflix’s business overall.
“We haven't seen any significant changes in planmix or plan take rate,” he said. “We also take some comfort in the fact that entertainment historically has been pretty resilient in tougher economic times. Netflix specifically also has been generally quite resilient, and we haven't seen any major impacts during those tougher times, albeit, of course, over a much shorter history.”
He indeed that with Netflix pricing starting at $7.99 a month for its ad-supported tier, it represent a good value and that demand for entertainment is likely to remain strong.
Before Netflix released its earnings, there were reports that Netflix had set a goal of tripling revenue by 2030.
While not exactly confirming that was the plan, Netflix execs said they saw plenty of room for continued growth.
“You think about engagement, we're less than 10% of TV hours from an audience or a connected households perspective. We still got hundreds of millions of folks to sign-up, and from a revenue perspective, we're about 6% of consumer spend in ad revenue in the countries we serve, in the areas that we serve,” Peters said. “So, we believe we've got plenty of room to grow our engagement, our revenue, and our profit.”
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So far, advertisers are not planning to cut back on their spending on TV and streaming, according to measurement company iSpot, which released the results of an annual survey of its clients.
Despite the tariff gyrations and market rollercoaster they've caused, according to iSpot’s TV and Video Ad Strategy Report, 51% expected their budgets to go up and just 14% see a decrease in their spending plans.
“Measurement-focused marketers are signaling that they are confident in the power of TV and streaming, “ said Stu Schwartzapfel, executive VP of media at iSpot. “As investments in TV and streaming grow, the demand for real-time, transparent measurement has never been greater and the results of our Upfronts survey show that for over half of marketers, outcomes are the most critical factor in media buys.”
With the upfronts approaching, advertisers said that about 36% of their TV and streaming budgets will be spent in the scatter market. The survey found that 25% planned to increase their scatter spending this year, while 13% were eying a decrease. (14% said they don’t buy in the scatter market at all.)
iSpot’s customers said they’d like more information about the ads they buy from streamers. While 80% of respondents said that streaming partners provide reach & frequency data, and 61% received demographic data,, the majority of streaming advertisers aren’t getting context from partners. The problems: 59% don’t receive linear/streaming overlap data, 56% don’t see programming data, and 52% don’t receive attribution data.
More than three-quarters of the respondents said that measurement solutions should come from an independent third party, with 23% of the total strongly agreeing.
When it comes to what marketers are looking for in terms of research on which to base media buys, 53% of respondents say that outcomes have become the most critical factor, followed by value at 27% and verified ad delivery at 11%. Traditional ratings were a key factor for just 9% of the respondents.
Looking forward, 38% of those surveyed said the planned to test data-enriched advertising this year. A large number of respondents were also looking at AI-generated creative and shoppable ads.
iSpot said it surveyed 260 marketers from 208 brands between February 27 and March 2 to compile its report.
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At a time when buyers are searching for better ways to measure the reach and frequency of CTV campaigns, Samsung Ads is rolling out Optimal Reach, which it says uses its ACR footprint to provide insights into audience reach across linear and in-app streaming.
One unnamed luxury automaker used Optimal Reach to get 47% incremental reach with CTV above its linear and AVOD campaigns. The brand was able to get its message to more than 3 million previously hard to reach luxury auto intenders, Samsung said.
Buyers have good reason to worry about the way they’ve been planning CTV advertising.. Samsung Ads said it analyzed 18 campaigns and found that on average they missed more than 40% of their potential reach, even within a target audience.
“Optimal Reach allowed our luxury automaker partner to engage millions of potential customers that traditional targeting had left outside the margins of their campaigns. Our technology leaves no stone unturned, giving marketers more data, more control, and more value,” said Michael Scott, Vice President and Head of Ad Sales and Operations, Samsung Ads. “Backed by Samsung’s unmatched access to impactful TV audiences, the Optimal Reach portfolio is the single-source solution to drive effective incrementality, conquesting, and frequency—now across both linear and AVOD.”
Coming up: Samsung Ads plans to use its tech go guide advertisers who want to manage frequency of their campaigns and target users of competitive brands.
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Speaking of Samsung, the smart-TV maker said that its Samsung TV Plus streaming platform now offers nearly 700 channels in the U.S and more than 3,500 globally. Samsung TV Plus reaches 88 million monthly active years and has grown 177% year-over-year in terms of hours viewed. What would Bruce Springsteen say?