Netflix doubles ad revenue in 2024, targets another doubling in 2025

Through 2025, Netflix plans to double revenue from advertising on the back of an expanded ad-supported tier offering. The streaming giant’s revenue grew 16% to $10.2 billion in 2024, supported by subscriber and ad revenue growth, with operating margins rising to 27%. Netflix added 19 million subscribers in the fourth quarter alone, far exceeding Wall Street’s forecast of 9.8 million, and bringing its global subscriber base to 302 million.

In an earnings call announcing Q4 results, co-CEO Gregory K. Peters revealed that Netflix doubled its ad revenue year-over-year in 2024 and exceeded its targets for the quarter. He noted that in Q4, ad-supported plans accounted for over 55% of signups across the 12 countries where the tier is available. For reference, that reported number was 50% in October and 45% in July 2024.

Peters added, “Membership on those ad plans has increased about 30% quarter over quarter.” The ad-supported tier is currently available in markets including Australia, Japan, and Korea in the APAC region.

However, industry analyst Ian Whittaker offers a more cautious perspective: "Netflix stated its advertising revenues roughly doubled year-over-year in 2024 and will do the same in 2025. However, we do not have an exact number, and, in my history of covering companies, if the absolute number was significant, Netflix would be reporting it (it is not modest in other claims). The language also suggests that its growth in advertising is not accelerating—management used the word 'solid' more than once to describe advertising progress, which—in a situation like this—is usually code for slow. I would say Netflix has a lot to do here."

Peters highlighted that engagement from ad-supported tier subscribers was comparable to non-ad-supported users. The platform has a greater focus on the ad tier and is positioning itself as an attractive platform for advertisers. For instance, multiple partnerships were established for one of Netflix’s largest shows this year—Squid Games—across ad-supported countries. Netflix also secured its first single-title sponsorship in Korea with Kia, centred around a new SUV model, featuring a three-part custom ad creative.

Netflix's ad stack

Another priority for Netflix in 2025 will be building its bespoke ad stack. Peters described 2025 as the year Netflix would transition from the “crawl to walk” phase in terms of tech tools. Having experienced early success with its ad stack in Canada, Netflix is planning a rollout to other ad-supported markets, starting with the US in April.

Programmatic guaranteed buying, initially available in the Americas, is expected to expand to Netflix’s Asian ad-tier markets later this year. Speaking about the benefits of having its own ad stack, Peters explained, “The biggest initial benefit is enabling more flexibility, more ways of buying for advertisers, fewer activation hurdles, and improving the overall buyer experience.”

Increasing the ease of transacting with Netflix and using a first-party ad tech platform will allow the company to deliver more critical capabilities to advertisers, including programmatic availability, enhanced targeting, more data sources, measurement, reporting, and incrementality studies. 

Meanwhile, the streaming giant has raised the prices of its subscription plans in the US, including its ad-supported tier. It will also raise prices in Canada, Argentina and Portugal. Under the new pricing structure, the standard plan will increase by $2.50 to $17.99 per month—the first hike in three years. The ad-supported tier will now cost $7.99 per month, up by $1, while the premium plan rises by $2 to $24.99 per month. Analysts forecast the US alone (assuming an average of $1.5 per month increase per household) would raise to ~ $1.6 billion in extra revenues for the full year on Q4 sub numbers.

Commenting on the company’s advertising strategy, co-CEO Gregory K. Peters acknowledged that Netflix still has “considerable work” to do in maximising ad monetisation. He added: "We are confident we can continue to grow revenue at a solid pace and earn a growing piece of that over $25 billion in CTV ad spend.”