Netflix Sees Early Gains In US Ad Business

Key Takeaways:

• The shopping category of advertisers in the US spent the most on Hulu and Netflix ads compared to other categories of advertisers. Hulu commands a majority (~55% on average from 1Q23-4Q23 QTD) of US advertiser spend from Shopping. The service benefits from its legacy status as an ad-supported OTT service vs some of its peers who are just making the foray into ad-supported streaming

• Procter & Gamble (CPG) and AbbVie (Health & Wellness) are the top two advertisers across all of OTT by total US ad spend. Both Procter & Gamble and AbbVie advertise heavily on Hulu vs other streaming services with 33% and 70% of each company’s OTT budget allocated to the platform

  • Both Procter & Gamble and AbbVie have yet to utilize the Netflix OTT ad network. Long standing relationships with Hulu (Disney) could be driving this aversion to advertising via Netflix

• Although young, Netflix’s ad-supported service is growing quickly and advertisers are beginning to jump on board. 7/10 top categories of advertisers on Netflix increased US ad spend by an average of 70% QoQ in 3Q23, while 9/10 top advertisers increased US ad spend by an average of 181% QoQ

• An example of a potential threat to other SVOD platform ad revenues with the rise of Disney’s newly merged Disney+ and Hulu service can be seen in the children’s apparel sub category. Advertisers in this category spend the most on Hulu (60%) followed by Netflix (19%) and Tubi (10%) as of 2023 YTD

  • Netflix’s 19% share of children’s apparel ad spend could be vulnerable should advertisers decide they want to ramp up spend heavily on the new Disney+ service, a network geared more towards families (children and parents) who would be more likely to buy these products

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