Exclusive: Netflix Closes First Upfront Season, Doubles Ad Tier Monthly Active Users to 10 Million

Netflix is officially crossing the upfront finish line for the first time.

Adweek has exclusively learned the company has closed its first upfront and doubled its monthly active users globally to more than 10 million ad tier users. In May, the company announced its ad tier had nearly 5 million global monthly active users.

For Netflix’s first year of upfront negotiations, the company secured deals with all major advertising holding companies, as well as multiple independent agencies, with all deals coming at “top-of-market pricing in the streaming industry,” according to a source familiar with the negotiations. The source noted the company “took share from traditional TV broadcasters as well as digital video platforms.”

Overall, Netflix closed the upfront market “in line with expectations,” seeing investment from all key categories, including auto, CPG and retail. And following Netflix’s announcement of new title and moment sponsorships, the company has filled nearly all inventory for 2023-2024.

Additionally, the company’s ad-supported plan membership has now doubled since Q1, with the offering already having a total ARM (average revenue per member) greater than its standard plan through its subscriptions and ads.

Netflix joins NBCUniversal, Fox, Paramount, TelevisaUnivision, Warner Bros. Discovery and Disney in closing upfront talks. The CW announced it’s winding down negotiations as well.

The streaming giant made an upfront splash earlier this year, announcing it would present in Paramount’s vacated Wednesday upfront week slot. The company made waves again when it chose to go virtual for its presentation amid ongoing disruptions from the Writers Guild of America strike.

Following the presentation, Peter Naylor, vp worldwide ad sales at Netflix, talked to Adweek about the company’s last-minute shift, saying much of the presentation translated seamlessly.

“We just adjusted a bit in light of the context of how we’re presenting it, but, by and large, the message and everything were the same,” Naylor said. “Fortunately, the production was super tight and beautiful with all of our content, so it seemed to work out.”

And the industry responded, with the company’s stock price immediately receiving a boost following the virtual presentation, which Naylor called a “happy ripple effect.”

“We’re purposeful and deliberate with the numbers and the insight we release to the market, both to Wall Street and Madison Avenue. We want to make sure that everything is stable and reliable as we think they need to be,” Naylor said.

The Netflix ad effect

Even with the company’s successes amid a soft market, it’s still early days for Netflix’s ad tier, which launched in November 2022.

During its upfront presentation, Jeremi Gorman, president, worldwide advertising, put things into perspective.

“We are building a forever business,” Gorman said, adding that in the first six months the company “worked hard to be brilliant at the basics, focusing on areas advertisers told us matter most–like geo, age and gender targeting; third-party verification and deploying the right brand suitability mechanisms for [advertisers] to make the best decisions for [their] brand.”

With that in mind, ad tier improvements are forthcoming for both marketers and customers.

Key measurement tools such as Nielsen DAR (Digital Ad Ratings), which offers deduplicated audience measurement metrics, and capabilities from EDO for ad campaign impact are on the way.

Additionally, Netflix has implemented two concurrent streams in all 12 markets where an ad tier is available, and improved video quality, with 1080p versus the initial 720p for ad tier users.

In its most recent earnings call, the streamer announced it added 5.9 million new subscribers (1.17 million paid subscribers in the U.S.), reaching 238.4 million globally. And many of those subs may be leaning towards the ad tier.

At the upfront in May, Greg Peters, co-CEO, Netflix, explained that on average more than a quarter of Netflix sign-ups now choose the ads plan in countries where it’s available, and nearly 80% of ad-supported viewing happens through a TV.