Netflix Q1 2024 Advertising Trends and Earnings Results

Key Takeaways:

• Netflix shares faltered after the company announced that it would cease providing a reported metric around its subscriber count in 1Q25 given its broader focus of top and bottom line growth. The company also stressed a heavy emphasis on engagement as a needle-driving metric moving forward

  • ST data shows that Netflix users spent 98 mins/wk on the app in 1Q24, far greater than that of its competitors such as Hulu, Peacock, Max, Disney+, Prime Video and Paramount+ all at <84 mins/wk. Also, Netflix boasts the highest penetration of retained users at 78% in 1Q24 vs <71% for its aforementioned competitor set

• Per ST data, 7/10 of the top spending verticals on Netflix’s ad network increased US ad spend by an average of ~120% YoY in 1Q24, indicating a material and growing interest in leveraging the streaming platform’s ad network to instill brand awareness and connect with consumers

  • Shopping, which was previously the largest advertiser vertical on Netflix by spend, was replaced by Travel & Tourism in 1Q24 (+86% YoY) as advertisers likely tried to capitalize on consumer demand for travel around the spring break season. Furthermore, advertisers in the Travel & Tourism vertical represented more than a fifth (22%) of total US ad spend on Netflix’s ad network in 1Q24, up from ~10% in 1Q23

  • ST data indicates that Netflix has attracted many new advertisers despite logistical (scaling and measurement) issues, which may help the company kickstart ad revenue. A material portion (75%) of Netflix’s total US ad spend was from new advertisers in 1Q24, which were advertisers that hadn’t advertised at all on Netflix in 1Q23 vs <11% for competitors such as Peacock, Paramount+, Pluto TV, Hulu and Tubi

• As suggested in last quarter’s Sensor Tower On The Small Screen, short-form video has rapidly become a major competitive threat for user attention across the entertainment space. Per ST data, US mobile users in 1Q24 spent 348mn hours/day on short-form video apps, up 22% vs 1Q21. Comparatively, US mobile users spent 148mn and 12mn hours/day on social and streaming apps, respectively, down -10% and -14% compared to 1Q21, respectively. This indicates that social media and streaming apps have struggled to retain users’ attention amidst the rise of short-form video platforms

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