Where Will Netflix Ad Budgets Come From?

January 12, 2023

US subscription over-the-top (OTT) platform ad spending is predicted to grow substantially this year, and here’s one reason why: Netflix has entered the fray with an ad-supported tier. But where will Netflix ad budgets come from? A Pixability report [download page] checked in with media agencies involved in connected TV to find out.

In surveying 196 US-based media agency professionals who work directly on YouTube and/or Connected TV (CTV) campaigns for brand advertisers, Pixability found that the vast majority (93%) anticipate that the majority of Netflix ad spend will come from other budgets, rather than being incremental in nature.

Most commonly, agencies expect that advertisers will shift budgets toward Netflix from other connected TV (CTV) platform budgets, with 38% anticipating this to be the case. The next-most cannibalized budget will be traditional TV, with 17% of respondents anticipating that Netflix ad budgets will pull from the legacy medium.

These results mask a significant disparity in opinion between Big 6 and independent agencies. Big 6 respondents are equally as likely to believe that the majority of Netflix ad budgets will come from traditional TV (25%) as from other CTV platform budgets (25%). By contrast, independent agency respondents are three times more likely to anticipate that most Netflix ad budgets will pull from other CTV platform budgets (43%) than from traditional TV budgets (14%).

(For what it’s worth, past research has indicated that growth in CTV budgets themselves have come at the expense of linear TV.)

Meanwhile, in separate results from Pixability’s study, more than 6 in 10 (62% of) agencies view DE&I as a very (28%) or fairly (34%) important part of their ad strategy. DE&I is considered more important than sustainability, which is considered very (11%) or fairly (35%) important by fewer than half of respondents overall.

For more, download the report here.

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