What Netflix’s Password Sharing Crackdown Means for CTV Advertising

CTV advertising is more prominent than ever, and the industry has grown dramatically over the past year in terms of ad spend, number of consumers streaming, and ad-supported services. As businesses and media companies attempt to adjust to changing consumer trends, CTV provides a unique opportunity for brands to connect with their target audience in an interactive, personal, and immediate way.

 

However, Netflix’s recent crackdown on password sharing has raised some major questions about the network’s role in the connected TV landscape. As an advertiser, you may be wondering how this will impact your campaigns.

 

Is Netflix still a viable option or no longer worth investing in?

 

Leading Up to the Netflix Password Sharing Crackdown

 

Netflix saw a significant decrease in its subscriber base in 2022, which led the streaming giant to introduce a new ad-supported tier at a lower price point. The latest offering, Basic with Ads, includes all the features of the original Basic Plan but at a reduced cost and with approximately 4-5 minutes of advertisements per hour of content consumption.

 

This solution presented a unique opportunity for advertisers to reach viewers transitioning away from traditional linear TV within a high-quality, premium environment on one of the world’s largest streaming platforms.

 

In addition to its ad-supported plan, Netflix started addressing password sharing with an “extra member” feature, which creates sub-accounts for a fee, allowing Netflix to monetize password sharing. As a platform that once tweeted “Love is sharing a password,” this news came as a shock to subscribers. While this policy will be a gradual process — there has been no date set for when it will hit the U.S. market — subscription holders have more to consider with their Netflix accounts moving forward. However, with an overly saturated market, Netflix may not be the last platform to take a stand on the password-sharing issue.

 

Although Netflix may have complicated the CTV landscape with its new ad-supported tiers and crackdown on password sharing, you can still create successful campaigns if you know how to navigate these industry changes and evolve to meet the current CTV advertising trends.

 

What’s Happening in the CTV Advertising Landscape?

 

The emerging trends around cord-cutting show that only 56% of Americans watched satellite or cable TV in 2021, and the total number of cord-cutters was predicted to have reached 55.1 million in 2022. Streaming platforms are essential players in the entertainment industry; it is clear that streaming services are where viewers look for content. As a result, that is where advertisers need to be present, too.

 

Ad-supported streaming is nothing new in the CTV landscape, as platforms like Hulu and Peacock offered ad-supported plans when first entering the market. Ad-supported platforms can benefit all parties involved: Streaming platforms can generate more revenue while still keeping subscription fees low, consumers can access more content without breaking the bank, and advertisers are able to get their brands in front of a wide audience.

 

However, there is a massive barrier to entry when deciding to invest in CTV advertising. Advertisers often lack understanding about the types of formats available, costs, purchasing methods, and overall strategy. Without a comprehensive understanding of CTV advertising, brands risk unintentionally falling into a silo by investing in one platform or network rather than broadening their reach across multiple platforms.

 

Key Considerations When Advertising on Netflix

 

Netflix’s move into the ad-supported market ultimately highlights the importance of CTV advertising for streaming platforms to keep up in the cord-cutting era. If you are looking into how to advertise on Netflix for your CTV strategies, here are a few things to keep in mind:

 

1. Your target audience may not be on the new Netflix tier.

Between the new ad-supported tier and the password crackdown, there is a lot going on with Netflix, and consumers are still processing the changes with the streaming giant. As an advertiser, you must consider your target audience’s behavior when choosing whether to advertise on Netflix’s ad-supported tier.

 

Fortunately, recent data indicates that approximately half of ad-supported Netflix sign-ups as of January 2023 were new to Netflix. While your current audience may be slow to adopt Netflix’s recent strategy, it’s worth considering the potential opportunity presented by a new wave of Netflix viewers who are utilizing this new plan.

 

2. Netflix’s ad-supported tier is still in the early stages.

While there is an opportunity to reach audiences on this platform, it’s worth noting that Netflix is still working out the kinks of their new infrastructure, and their recent crackdown on password sharing may impact viewer numbers.

 

CPMs on Netflix are reportedly higher than other platforms, but this premium pricing goes hand-in-hand with premium, brand-safe inventory for your campaigns. As such, you can expect your ads to be placed in front of high-quality content, which may lead to more engagement and higher conversion rates. Just remember that the audience size may be smaller than other platforms, at least for the time being.

 

3. There are limited ad spots available on Netflix.

Netflix offers premium inventory to advertisers — but with limited availability. This results in high demand, and only a few advertisers can get ads placed. However, the platform’s measurement tools provide advertisers with viewability, demographic, location, and content data. Implementing advanced targeting and programmatic ad placement can complement other streaming platforms in your CTV strategy.

 

Is Advertising on Netflix Right for Your Brand?

 

It’s important to note that Netflix is still the king of streaming, with more than 230 million subscribers. Amidst the changes, the platform still offers value to subscribers with a premium content-viewing experience. In time, more and more advertisers will be able to reap the benefits of advertising on the platform.

 

As streaming platforms continue to grow in popularity and traditional TV viewership declines, it’s essential for brands to prioritize their presence on CTV to connect with their target audience and stay ahead of the competition. Staying up to date on CTV advertising trends is crucial to reaching your target audience in the most effective way possible.

 

As Netflix continues to develop its advertising opportunities, continue to check out our blog for the most up-to-date information or connect with our team to determine the best CTV advertising strategy to meet your goals.