Netflix has to refund advertisers after a lackluster first month with their ad-supported tier: report


Netflix has to refund advertisers after a lackluster first month with their ad-supported tier: report +2023

It looks like NetflixThe ad-supported tier of is not yielding the numbers the company was expecting. According to five agency executives, the streaming platform is now allowing advertisers to take their money back on ads that haven’t run yet, and the company’s shares are down nearly 10% year-to-date, per digitag.

While Netflix CEO Reed Hastings initially dismissed any chance of the streamer hosting ads, he changed tack when the company reported its first subscriber loss in over a decade last spring. Presumably to combat the loss, the company rolled out an ad-supported tier last month that costs $6.99 per month, as opposed to an ad-free plan that costs $9.99 per month.

However, the new feature seems to have gotten off to a slow start, with the streaming platform only delivering about 80% of its expected ad audience per Digiday in some cases.

“You can’t deliver. You do not have enough stock to deliver. So they’re literally giving the money back,” an agency executive told the outlet.

The company uses a “pay-by-delivery” structure, where advertisers only provide the money for viewers who reach them, while anything not spent is refunded to them at the end of the quarter, Digiday reports. Another agency executive added that advertisers were pushing to get the money back now so they could “spend it during the critical holiday season,” which Netflix agreed to do.

Meanwhile, others hoping viewership will continue to grow have opted to delay their ads until the first quarter of 2023. A third agency executive told Digiday, “There have been different ways they have addressed missing delivery targets and customers want a solution in different ways. Not everyone wants money back at the end of a financial year.”

Well Netflix, it looks like you’ll have to come up with something interesting for this ad-supported plan. Or continue to feel the wrath of falling stocks.

Decider has reached out to Netflix for comment.

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