Netflix Struggles to Meet Ad Guarantees - Report

Netflix (NFLX) stock is down more than 7% and trading below $300 for the first time this month, following a breach that exposed flaws in its advertising platform . The streaming giant is "not meeting ad-supported audience guarantees," the publication writes. In some cases, the shortfall can reach 20%.

According to DigiDay, Netflix returns funds to advertisers. “They can't deliver. They don't have enough inventory to deliver. So they're literally giving the money back," an agency official told the publication.

A Netflix spokesperson did not immediately respond to IndieWire's request for comment on this story.

Netflix's original advertising deals were pay-as-you-go, meaning if they don't deliver the eyeballs, the advertiser doesn't pay. Traditional television usually offers a catch-up at a later date, but neither is a perfect system. It's worth noting that, as DigiDay pointed out, Netflix started pitching advertisers and agencies before hiring Jeremi Gorman and Peter Naylor to run its AVOD (ad-supported video-on-demand) business. p> Related Related
Some advertisers didn't want cash back at the end of the year and opted to defer the cash to early 2023. Others have such seasonal business that the holiday season was the only time it made sense to advertise.
DigiDay sources viewed Netflix's lack of AVOD opportunities as a byproduct of how quickly the company built, sold (with help from Microsoft!), and rolled out its "Basic with Ads".

"I think we knew there would be a supply problem, and they can't accept a lot of money," said another branch manager.

That said, agency executives believe that Netflix has failed to properly market its ad-supported tier. If "Basic with Ads" had more customers, it might show more ads.

Netflix is "still seeking ad deals for 2023," DigiDay wrote, but they may be cooling it off on price. At the start of Netflix's negotiations, the streamer asked for $65 per thousand impressions, the highest sum in the industry. These days it's more like $55, but like NFLX's price per share, it could go down further.

Read the DigiDay story.

A week ago today, Wells Fargo equity analysts moved NFLX to "Buy" and raised their target price from $300 to $400. Last week was also the week that "Wednesday" became Netflix's third show to cross 1 billion hours of streaming time in its first 28 days. The "Addams Family" spinoff starring Jenna Ortega needed just 19 days to amass 1.02 billion hours. Only fellow English-language TV series "Stranger Things 4" and Korean-language sensation "Squid Game" received more views in their first four weeks. "Wednesday" still has nine days to try to catch up or overtake them.

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Netflix Struggles to Meet Ad Guarantees - Report

Netflix (NFLX) stock is down more than 7% and trading below $300 for the first time this month, following a breach that exposed flaws in its advertising platform . The streaming giant is "not meeting ad-supported audience guarantees," the publication writes. In some cases, the shortfall can reach 20%.

According to DigiDay, Netflix returns funds to advertisers. “They can't deliver. They don't have enough inventory to deliver. So they're literally giving the money back," an agency official told the publication.

A Netflix spokesperson did not immediately respond to IndieWire's request for comment on this story.

Netflix's original advertising deals were pay-as-you-go, meaning if they don't deliver the eyeballs, the advertiser doesn't pay. Traditional television usually offers a catch-up at a later date, but neither is a perfect system. It's worth noting that, as DigiDay pointed out, Netflix started pitching advertisers and agencies before hiring Jeremi Gorman and Peter Naylor to run its AVOD (ad-supported video-on-demand) business. p> Related Related

Some advertisers didn't want cash back at the end of the year and opted to defer the cash to early 2023. Others have such seasonal business that the holiday season was the only time it made sense to advertise.

DigiDay sources viewed Netflix's lack of AVOD opportunities as a byproduct of how quickly the company built, sold (with help from Microsoft!), and rolled out its "Basic with Ads".

"I think we knew there would be a supply problem, and they can't accept a lot of money," said another branch manager.

That said, agency executives believe that Netflix has failed to properly market its ad-supported tier. If "Basic with Ads" had more customers, it might show more ads.

Netflix is "still seeking ad deals for 2023," DigiDay wrote, but they may be cooling it off on price. At the start of Netflix's negotiations, the streamer asked for $65 per thousand impressions, the highest sum in the industry. These days it's more like $55, but like NFLX's price per share, it could go down further.

Read the DigiDay story.

A week ago today, Wells Fargo equity analysts moved NFLX to "Buy" and raised their target price from $300 to $400. Last week was also the week that "Wednesday" became Netflix's third show to cross 1 billion hours of streaming time in its first 28 days. The "Addams Family" spinoff starring Jenna Ortega needed just 19 days to amass 1.02 billion hours. Only fellow English-language TV series "Stranger Things 4" and Korean-language sensation "Squid Game" received more views in their first four weeks. "Wednesday" still has nine days to try to catch up or overtake them.