AVOD (Advertising Video on Demand) got a shot in the arm with the announcement that Microsoft has been named Netflix’s technology and sales partner to help power Netflix’s first ad-supported subscription offering.
Earlier this year Netflix told its employees that it was going to introduce an ad-supported, lower-priced subscription tier during the fourth quarter of 2022. With the announcement that Microsoft will be Netflix’s technology and sales partner in this initiative, Netflix is showing that it is working according to plan.
Marketers looking to Microsoft for their advertising needs will have access to the Netflix audience and premium connected TV inventory. Microsoft has been strengthening its advertising technology itself: in January of this year, the software giant bought global programmatic advertising market Xandr from AT&T.
All ads served on Netflix will be exclusively available through the Microsoft platform. The announcement also endorses Microsoft’s approach to privacy, which is built on protecting customers’ information. Microsoft is now excited to offer new premium value to their ecosystem of marketers and partners while helping Netflix deliver more choice to their customers.
Netflix’s intention to start monetizing its content with advertising with the help of Microsoft is a first for the streaming giant and will help accelerate the already high growth of the AVOD sector. According to a recently released report by Research and Markets, U.S AVOD will grow by $19 billion to $31 billion by 2027 – remaining the largest country by far. The US has the world’s most sophisticated advertising industry by some distance, plus AVOD choice is greater in the U.S. than anywhere else. The US will account for 46% of the global total by 2027, up from 39% in 2021.
AVOD: Netflix’s New Lower Priced Ad Supported Offering
Here is what Netflix COO Greg Peters said:
“In April we announced that we will introduce a new lower priced ad-supported subscription plan for consumers, in addition to our existing ads-free basic, standard, and premium plans. Today we are pleased to announce that we have selected Microsoft as our global advertising technology and sales partner.
Microsoft has the proven ability to support all our advertising needs as we together build a new ad-supported offering.
“Microsoft has the proven ability to support all our advertising needs as we together build a new ad-supported offering. More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members.
“It’s very early days and we have much to work through. But our long-term goal is clear: More choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We’re excited to work with Microsoft as we bring this new service to life.”