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Opinion: What Advertisers Can Expect from the Streamers

With Core recently becoming the first agency to run ads on one of the big streamers with a UK campaign, David Mulligan, head of programmatic shares some insights on how the campaign went and what Irish advertisers expect when the main players enter the Irish market. 

The ad-funded streaming player model has finally come to the island of Ireland in recent weeks, starting first in Northern Ireland. Netflix, Disney+ and Amazon Prime Video all launched their offerings recently, but none have confirmed when they will become available in the Republic of Ireland.

With a launch date still to be confirmed for Ireland, it is difficult to predict how large the ad-funded models would be locally. If you take Netflix for example, and look at global trends, the ad funded model as it stands would still be quite small for this market.

Some 10% of Netflix users have signed up to the model. If this trend was replicated here, Netflix would probably be the sixth or seventh largest Video (including TV) platform in Ireland.  If more people subscribe to this model over the coming years, its significance on media plans will change. For now, the SVOD players impact on marketing campaigns is small, but certainly growing. We await their launch locally, but in the meantime, we can share some learnings and approaches to advertising on streaming platforms.

Learnings from Core

Core recently became the first agency in Ireland to go live with ads on all these platforms recently. Here are the initial learnings from these tests.

Access, set up and activation.: All three platforms are available through programmatic pipelines which makes transacting easier once initial contact has been made with their sales teams.

Performance : Performance for all three were on a par with what we would expect from Broadcast VOD, with Netflix and Prime Video completion rates being a few percentage points ahead of Disney+ on the campaigns initially tested.

Although CPMs vary substantially by platform, the combined Cost Per Completed View came in at a similar rate as the broadcasters in Northern Ireland.

Scale is an issue for now: Targeting is still limited, until further signups to the ad model on all three platforms. For the budgets Core invested, there was no issue in securing enough inventory.

Password sharing crackdowns, new content and lucrative package deals are expected to increase the numbers of ad subscribers to each platform.

CPMs are expected to reduce in line with audience growth which will make the platforms an effective space to be in comparable to their competitors.

Current Pricing Structures

Netflix: Netflix was first to market in the UK and elsewhere. The platform’s ‘Standard with Ads’ package is £4.99 per month for subscribers. The next available is the ‘Standard’ package, which is £10.99 per month. Netflix have launched this model in twelve countries with the aim to eventually scale to other markets.

Disney+: Disney+ entered the market with a price of £4.99 per month, which includes advertising for users. The next available package is the ‘Standard’ package, which is £7.99 per month. Disney have rolled this offer out to the US and Canada, as well as nine European countries.

Amazon Prime: Amazon Prime Video is £5.99 per month. Amazon have positioned their platform slightly differently to competitors with all members receiving ads. If users want to have ad free content, there is an additional cost of £2.99 per month. Amazon Prime Video with ads launched in January 2024 initially in four markets, but other markets are expected to follow throughout the year.

Before launching ads in various markets, both Netflix and Disney+ have announced password sharing clampdowns, and a slight price increase in membership packages. After a few months they have then formally introduced their ad funded model with a £2 – £3 difference to the next available package with no ads.

After another few months, subscribers have then been notified of another change in pricing, which for Netflix meant a difference of £6 between the ad funded model and standard with no ads. This £6 difference during a cost-of-living crisis is proving to be a driver of growth for them recently.

Audience Sizes

Netflix has 40 million ad subscribers globally

Netflix have stated that in markets where they have introduced ads, approximately 10% of subscribers are on ad-based models. In their latest quarterly earnings report, Netflix reported that 40% of new subscribers in countries that have the ad funded model chose a subscription with advertising. Globally, Netlflix has 40 million ad subscribers which is up 17m from January 2024.

Disney pulling together various content strands

Disney had previously announced a total of 5.2 million ad subscribers back in November 2023, but that figure it thought to increased substantially since their password sharing crackdown was introduced. Disney are looking to expand their ad model uptake via packages of other streaming companies they own including having Disney+, Star, ESPN and Hulu (in some markets) all grouped together with an ad funded option.

Amazon Prime Video has upwards of 15 million ad-based subscribers

As Amazon Prime Video have gone down an opt-out model, initial ad subscribers in January 2024 put them at 15 million in just the UK, but those figures are expected to reduce over time as more people opt in to Prime Video with no ads. Not everyone is happy of course with this launch, with Kantar Worldpanel noting that Prime Video “faced significant challenges” as it introduced an ad-supported tier, resulting in “notable subscriber churn and dissatisfaction.”

At present the product offerings for each platform is still in its early stages. Each platform has gone down a slightly different route to market with evolving targeting capabilities coinciding with subscriber growth, and a slight variance in pricing.

Campaign Management on Each Platform

How Advertising on Netflix works

Netflix partnered with Microsoft as a tech and sales partner to sell via their Microsoft Invest Demand Side Platform (DSP). In the past few weeks, Netflix have announced they will bring in other DSPs such as Googles DV360 to expand their offering beyond one tech platform. Initially in the UK they only had run of site targeting available, but since then have introduced several new targeting options including genre, geo-location, age and gender, device, daypart and now layer Microsoft audiences across some buys.

Exepectation that Disney+ Targeting will Improve

Disney+ have remained agnostic with their route to buy, and in the past few weeks announced a deeper integration with DV360 to integrate the Disney Real-Time Ad Exchange (DRAX) which will mean an increased level of audience segmentation using Googles First Party Data in the future. For now, in the UK, as numbers grow, targeting is limited to age and demo, but buyers can also target by device or daypart which wasn’t available initially.

Amazon using Tried and Tested Ad Platform

Amazon Prime Video was built on the Amazon tech stack, which isn’t expected to change in the future. For most agencies utilising the Amazon DSP has been a normal part of business for a while to buy ads on Amazon.co.uk, Twitch and across the open web using Amazon data. As Prime Video have launched on their own DSP, targeting includes using Amazon first party data such as contextual or interest level, albeit with every layer of targeting reducing the audience size.

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