Netflix\u2019s advertising business definitively took flight in the first half of 2025. But despite client demand, buyers say a lack of measurement options and shallow links with key industry partners stand in the way of further investment.<\/p>\n
The streamer\u2019s second-quarter results, released July 17, showed a 16 percent increase in revenue. Including both subscriber and advertising income, its quarterly revenue was $11.1 billion. The company\u2019s ad tech stack is operational in the 12 countries it offers advertising, and it\u2019s doubled ad revenue since the second quarter of last year, according to chief financial officer Spencer Neumann. He didn\u2019t offer a more detailed breakdown of the firm\u2019s income, though.<\/p>\n
A cynical ear might detect a note of disappointment in that lack of detail. If that sounds pessimistic, consider the fact Netflix\u2019s share price fell in the after-hours trading following its earnings call. Both shareholders and the platform\u2019s executives would like ad revenues to rise farther and faster.<\/p>\n
The platform has 94 million monthly active subscribers to its ad-supported tier (as of May), and a recent Madison & Wall estimate<\/a> suggested its global ad revenues could reach $3 billion this year, equal to roughly seven percent of its annual revenue. But according to the Wall Street Journal<\/a>, it\u2019s internally forecasting that to rise to $9 billion in the next five years.<\/p>\n The good news, according to several media buyers at holding companies and large independents, some of whom spoke to Digiday anonymously in order to preserve their relationships with the streamer, is that Netlix now has a significant foothold on client media plans \u2014 one that\u2019s likely to grow once the dust has finally settled on upfronts season<\/a>.<\/p>\n \u201cNetflix is way up,\u201d said Eric Dunefsky, head of national investment at Crossmedia.\u00a0<\/p>\n Reflecting on the final days and weeks of this year\u2019s drawn-out television upfronts, PMG\u2019s head of emerging services Natalee Geldert previously told Digiday<\/a> that more advertisers were diverting TV budgets into ad-supported streaming, and that Netflix was a standout winner of that shift.\u00a0<\/p>\n \u201cThey\u2019re gaining traction quickly,\u201d she said. All of which points to Netflix maintaining its current double-digit revenue growth over coming months.<\/p>\n eMarketer analyst Jeremy Goldman estimated that Netflix currently enjoys a 5.2% market share in the U.S.; eMarketer estimates its current CTV ad revenues at $1.67 billion a year, out of a $31.9 billion CTV ad market. But the company is growing from a small base and is gaining on its peers, even as the overall segment expands. Video on demand ad spend in the U.K., for example, grew 26% to \u00a31.33bn ($1.77 billion) last year, according to Ofcom.<\/p>\n \u201c[Netflix] is growing as a percentage of overall video ad spending,\u201d Goldman said.<\/p>\n One holdco media buyer, who exchanged candor for anonymity, told Digiday the platform was now among their top five CTV partners for ad spend. Client investment had doubled in the last year (they didn\u2019t provide exact figures) driven by an expansion of its live programming, continued investment in its premium programming and Netflix\u2019s decision to open up to more DSPs. The latter is an ongoing focus for the streamer, which allows brands to invest programmatic budget via DSPs operated by Microsoft, The Trade Desk, DV360 and as of June, Yahoo.<\/p>\n Average CPMs (cost per thousand) hover at $30, representing a much more \u201ccompetitive\u201d price point than when Netflix first set up its stall at the end of 2022<\/a> (though streaming prices are generally higher than those of linear<\/a>). \u201cThey\u2019re priced more effectively than they have been. It\u2019s created the runway for all these partnerships,\u201d the buyer added.<\/p>\n For the second buyer, who also asked for anonymity, the streamer\u2019s moves to acquire WWE and NFL<\/a> rights in recent years have drawn in clients, they said, while its maturing programmatic capabilities would likely pull in further spending over the rest of the year.<\/p>\n A third holdco agency executive told Digiday its premium content slate had proven magnetic for client dollars. \u201cTheir unique content properties contribute to clients making sure that they\u2019re spending with Netflix. Their sponsorships and their integrations with particular properties are coveted,\u201d they said.<\/p>\n The bad news? Some clients are waiting to see how Netflix\u2019s in-house ad tech stack, its measurement capabilities and its partnerships with the broader ad industry pan out before dedicating more dollars.<\/p>\n \u201cThey still aren\u2019t where the largest streaming partners are in terms of the measurement capabilities that they have. That is something that they\u2019re working on, and they\u2019ve made a lot of promises, but I want to see that come to fruition,\u201d said the second buyer.\u00a0<\/p>\n Multi-touch attribution measurement, as well as more information on the context of programming surrounding ads running on Netflix for brand safety monitoring purposes, are near the top of marketers\u2019 CTV shopping lists, Goldman said.<\/p>\n These concerns apply to the other players in Netflix\u2019s competitive set<\/a>, as well as to the broader CTV marketplace. In 2024, the average CTV ad campaign running through Innovid\u2019s ad tech platform \u2013 which spans 95 million U.S. households \u2013 only reached 19.6% of those households<\/a>.\u00a0<\/p>\n But Amazon also has a diversity of data sources, ad formats and e-commerce tie-ins to tempt clients, while HBO, Paramount, and Disney boast legacy infrastructure and decades of expertise dealing with advertisers. For now, Netflix sits in the uncomfortable middle ground.\u00a0<\/p>\n \u201cThere\u2019s still work to do in making CTV behave more like other digital channels,\u201d said Esme Robinson, director, platform solutions at Epsilon. \u201cThe data exists but stitching it together across platforms and devices remains a challenge for many.\u201d<\/p>\n \u201cThe specific platforms that will win budgets will be the ones delivering outcomes, but with transparency \u2013 proving they\u2019re reaching the right people in the right context, with the right message,\u201d she added.<\/p>\n Netflix has the measurement problem in its sights. Within the last year, it\u2019s expanded its roster to include deals with Affinity Solutions, DoubleVerify, EDO Inc, Integral Ad Science, iSpotTV, Kantar, Lucid, NCSolutions, Nielsen and TVision. Such partners are crucial to unlocking larger commitments from brands, because marketers want to see viewership and engagement metrics confirmed by third parties.<\/p>\n And on the recent analyst call, co-CEO Greg Peters promised analysts that the company had plotted out a \u201csignificant roadmap of features,\u201d including \u201cthings like improved targeting and measurement\u201d.<\/p>\n That\u2019s in line with brand demands \u2013 but they\u2019ll need to see the proof in the pudding, before unlocking the kind of spend the streamer hopes to secure.<\/p>\n<\/div>\n