The platform did not meet the amount of audience that compromised the companies that brought their advertising to the streaming service through the basic plan, for this reason they had to return part of the money from the contract.
The streaming platform, Netflix, had to return money to sponsors, after not meeting the number of users it committed to the basic plan that includes ads.
It was in October that the application confirmed the implementation of a basic plan that includes advertising and catalog restrictions for users. This after raising the prices of its services and thus offering a cheaper option.
However, this does not seem to have given the expected result, since the platform does not he managed to gather enough people to fulfill the contract offered to the advertising companies. For this reason they were obliged to return part of the money in compensation.
The platform had to opt for this option after not meeting the promised audiences, reaching, in some cases, only 80% of the expected figures.
< h2>Netflix with advertising
Netflix launched the basic plan with ads in Spain on November 10, which reduces the price of entry to the platform to 5.49 euros (5,112 Chilean pesos) per month (2 .5 euros -something like 2,328 Chilean pesos- less compared to the basic plan).
In exchange, they included advertising, decreased playback quality and removed some of the most viewed titles from the catalog.
Low audience for ads
This new subscription plan is not reaching the number of views per ad that had been agreed with the advertising companies, remaining around 80% of the estimate.
A slow debut in the growth of users that has forced him to return the money for the ads not shown, according to the statements of five agency executives collected by the American magazine Digiday.
However, not all Advertisers have applied to get their money back. Those who have it back have been companies that were carrying out marketing campaigns specifically scheduled for these dates and have wanted to reallocate this expense.
However, other companies have opted to move that investment to the first months of 2023, confident that the audience will continue to growuntil the agreed guarantees are met by then.
The most expensive platform
Netflix’s advertising agreement system is based on payment on demand in which sponsors pay for the estimated amount of reach for their ads and, if that amount is not reached, Netflix would release the unspent ad dollars at the end of the quarter.< /p>
In addition, Netflix is the most expensive platform in this industry to spend on ads. The platform initially charged $65 for every thousand ad views, while Disney+, which also launched its ad-supported subscription plan on November 7, is priced at $50.
Now, even though Netflix has lowered the price to $55, it’s still more expensive than its rival.
It’s not the end of streaming ads
< p>Giving back to advertisers leaves Netflix in a bad spot. However, agency executives say it may be a “symptom of how quickly the company launched that business,” rather than a sign of the platform’s long-term prospects.
Likewise, the service continues to seek advertising agreements for 2023, as detailed by the executives, who also do not rule out that, in order to achieve them, Netflix will have to reduce even more the price per ad.