Netflix is allowing advertisers to ask for their money back after failing to deliver to its promised audience reach.
The news comes months after the company launched its low-tier subscription service for $6.99 a month, a dollar cheaper than other ad-supported subscription plans offered by Disney+ and Hulu.
According to five agency executives, the streaming giant managed to reach only 80% of its goal, which as a result, is triggering repayment to advertisers.
“They can’t deliver,” said one of the agency executives.
Under the terms of the deal, advertisers could pay Netflix on a delivery basis. Meaning advertisers were only liable to pay for the viewers they actually reached, and any unspent ad dollars must be returned to them.
Advertisers who have so far chosen to take their money back are the ones that ran marketing campaigns during the holiday shopping season. Meanwhile, other advertisers have instead asked to move their ad dollars to the first quarter of 2023 or later in the year as they believe Netflix’s ad-supported audience will continue to grow.
Netflix’s deal with its advertisers is fairly unique compared to traditional TV ad commitments, as TV networks keep committed ad dollars on the books and then work to satisfy viewership guarantees.