Netflix's upfront results may sound promising, but the streamer still needs to grasp the finer points of how the advertising game is played... Prime Video defaulted its members to ad-supported plans earlier this year, boasting a scale of 200 million US subscribers. With CPMs at $30, Prime Video is a better deal for advertisers compared to Netflix's $60 CPMs, despite Netflix's stronger branding. It's crucial for Netflix to adapt its strategies to remain competitive in the ad-supported streaming sector.
Currently, Netflix's ads plan has 40 million monthly active users, presented in individual viewing profiles grouped into a smaller number of paying accounts. This smaller audience base is likely contributing to Netflix's major decision to halve its CPMs from $60 to just under $30. The reduced costs reflect growing competition in the market, particularly from rivals that offer a stronger and more comprehensive advertising experience to prospective advertisers.
Ad revenue took up 10.9% of an average podcast's runtime in Q2 this year, up from 7.9% in Q2 2021. Though this increase suggests that ad dollars are becoming more pronounced in the podcasting format, it's notable that podcasters are also earning significantly more, with earnings rising to six cents per hour for each listener in 2024 from two cents in 2015. This trend indicates a shift toward monetization that could be driven by tech companies' investments in podcasting.
Spotify’s investment of over $1 billion in building a podcasting empire, through acquisitions and celebrity host contracts, highlights the pressure tech companies face to justify their expenditures. As ad percentages in podcasts rise alongside earnings for creators, this creates an environment where profitability and growth drive the continuous pursuit of innovative advertising solutions. This relentless chase for revenue and new audiences is reshaping the landscape of ad-supported media.
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