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With the looming economic challenges, customers are scrounging everywhere to conserve cash.
After receiving consumer pushback from raising its membership rates, Netflix rolled out its most recent tier: Standard with Advertisements, in November 2022.
The ads tier membership is $6.99 each month– nearly 55% lower monthly than its Basic subscription.
While the month-to-month expense is lower for customers, the newest tier comes with covert price.
Unforeseeable Ad Timing
In the new Netflix Fundamental with Advertisements tier, users can anticipate around 4-5 minutes of ads per hour.
How is this comparable to other Linked TV subscriptions?
Image credit: Table produced by the author, November 2022. Sources of information are connected in the image. While the amount
of ad time per hour for Netflix is comparable to other streaming services, the remaining problem is when an advertisement will show. Ad timings are unforeseeable, which disrupts the user experience. The video material for advertisements is about what you anticipate compared to other streaming services. However the exact same issue is at hand– when will this appear in a user’s watching experience on Netflix? According to Jay Peters from The Brink, a user’s advertisement
experience varies drastically in between kinds of content taken in: Image credit: Jay Peters, TheVerge.com
As you can see from this example, the amount of advertisements, in addition to the positioning of advertisements, is irregular, which leads to think that Netflix is evaluating to find the very best engagement for not only users but advertisers.
Particular Titles Feature A Premium Price
The second subtlety with Netflix Standard with Advertisements tier comes from what programs and motion pictures are used at this level.
Similar to the unforeseeable ad experience, the readily available titles on the Basic tier appears very scattered without a rhyme or factor.
The constraint should not come as a surprise to users, as Netflix revealed this back in July.
Titles that aren’t available for Standard users will reveal a red padlock, showing that it is limited.
The red padlock appears to be a passive “Contact us to Action” because users can click on the padlocked title, which takes them to an upgrade screen.
I think that Netflix’s subscriber strategy is to lure brand-new users to the service or get previous subscribers to come back at a Basic price level. This can help grow and scale their customer numbers after toppling because increasing costs.
When a user is in, limiting titles that might be a “must have” for users attempts to show users the worth of updating.
How Can Marketers Projection Connected TV Engagement?
Linked TV ads aren’t new to customers. Brands spent over $400 million in ads on Hulu alone in 2021.
In economic uncertainty, customers may want to compromise their viewing experience to include advertisements while trying to conserve money. However if the viewing experience decreases, consumers might be less likely to engage with Connected TV ads.
While it’s too early to outline Netflix Standard with Ads, a common gripe from consumers on other streaming services is the lack of range in ads.
Back in 2021, Morning Consult carried out a survey to customers about their experience with streaming services advertisements. According to the survey:
- 69% of users believed the advertisements they received were repetitive
- 79% of users were bothered by that experience
So, what does this mean for marketers?
Depending upon how you look at it, online marketers might see this as:
- A chance. If there are numerous duplicated advertisements, this could mean that competitors is short on Linked TV/OTT. If this holds true, the opportunity for brand awareness could be more economical for you prior to the OTT market becomes too saturated.
- A sign to keep away. If streaming services do not repair the customer’s viewing experience, users are less likely to engage with ads. And if titles are being restricted at a greater rate, customers might churn off at a faster rate than previously. This, in turn, indicates a high Expense Per Engagement for advertisers. This might be a more dangerous financial investment for brand names with restricted spending plans.
The newest Netflix price tier enables them to compete with other streaming services at a lower price. It’s an outstanding tactical move on their part, and it opens up the OTT space for advertisers to get in front of users who might not use other streaming services.
While the plan type is new, Netflix (as well as advertisers) should keep an eye on user engagement closely and make any strategic pivots necessary to take full advantage of engagement and subscriber growth.
While Netflix ads are open to bigger advertisement companies, I anticipate them to roll out an internal advertising platform comparable to Hulu at some point next year.
Have you attempted Linked TV/OTT ads yet? What has been your experience? Are they worth the financial investment?
Featured Image: Koshiro K/Best SMM Panel