Netflix declares ads business will "roughly double" as upfront deals close

Netflix's advertising ambitions took center stage during its July 17, 2025 earnings call, with executives making bold declarations about doubling revenue while completing a strategic break from Microsoft's advertising infrastructure. The streaming giant's pivot toward advertising represents one of the most aggressive moves into the $240 billion video advertising market by a subscription-first platform.

"Our US upfront is nearly complete as we have closed the vast majority of our deals with the major agencies," declared Co-CEO Greg Peters during the earnings presentation. "We're pleased with the results which are consistent with our goal to roughly double ads revenue this year."

The company reported Q2 2025 revenue of $11.08 billion, beating analyst estimates, but the earnings call focused extensively on advertising transformation rather than traditional subscription metrics. Netflix's completion of its proprietary ad technology rollout marks a direct challenge to established advertising platforms while positioning the company to capture television advertising budgets migrating from linear TV.

Microsoft relationship terminated as Netflix goes independent

Netflix severed its advertising technology dependence on Microsoft during Q2 2025, completing global deployment of its proprietary Netflix Ads Suite across all advertising markets. The strategic shift represents Netflix's determination to control its advertising destiny rather than share revenue with technology partners.

"We have completed the rollout of the Netflix Ads Suite, our proprietary first-party ad tech platform, across all our ads markets," Netflix stated in its shareholder letter. "We believe our ad tech platform is foundational to our long-term ads strategy and, over time, will enable us to offer better measurement, enhanced targeting, innovative ad formats and expanded programmatic capabilities."

Peters emphasized the global scope of the technology transition during the earnings call: "We've completed the rollout of our own ads tech stack, the Netflix ad suite to all of our ad markets now. So we're fully on our own stack around the world at this point."

The rollout encompassed all 13 countries where Netflix offers ad-supported streaming, including major markets like the United States, United Kingdom, Germany, France, and Japan. This comprehensive deployment enables Netflix to retain greater advertising revenue while offering advertisers direct platform access without intermediary technology fees.

"That rollout was generally smooth across all countries. We see good performance metrics across all countries and the early results are in line with our expectations," Peters confirmed, suggesting the transition avoided technical disruptions that could have impacted advertiser confidence.

Advertising executives reveal upfront sales success

Netflix's advertising leadership provided unprecedented detail about upfront sales performance, signaling confidence in the platform's ability to compete with traditional television for advertising budgets. The upfront advertising market typically represents advance commitments from major advertisers for the following year's programming.

"Our U.S. upfront, it's nearly complete. We've closed a large majority of deals with the major agencies," Peters revealed during the earnings call. "Those results have generally been in line or slightly better than our targets and consistent with our goal to roughly double the ads business this year."

The success of upfront negotiations demonstrates advertiser willingness to commit substantial budgets to Netflix's advertising inventory, particularly as traditional television viewership continues declining. Major advertising agencies typically represent billions of dollars in client spending, making their Netflix commitments significant validation of the platform's advertising potential.

Peters highlighted specific factors driving advertiser interest: "And what are advertisers excited about, growing scale is something we definitely hear. Also, a highly attentive and engaged audience. So bigger audience, but also an audience that's more engaged relative to our peers."

Netflix's audience engagement claims position the platform as premium advertising inventory compared to traditional television and competing streaming services. The company's assertion of superior engagement rates supports its ability to command higher advertising rates than less engaging alternatives.

Technology platform enables advanced advertising capabilities

Netflix's proprietary advertising platform delivers capabilities that the company argues surpass offerings from traditional advertising technology providers. The platform's features extend beyond basic ad serving to include sophisticated targeting and measurement tools designed to attract advertisers seeking precise audience reach.

"The rollout of our own ad tech stack, which helps deliver a bunch of features and then our slate, which is generally amazing and includes a growing number of live events that advertisers are excited about," Peters explained when describing advertiser enthusiasm factors.

The technology platform supports enhanced advertiser control over campaign management, according to Netflix executives. "As we mentioned before, the most immediate benefit from this rollout is just making it easier for advertisers to buy on Netflix. We hear that benefit, that ease from direct feedback talking to advertisers. They tell us that it's easier."

Netflix's claims of improved ease-of-use target advertiser frustrations with complex programmatic buying processes across multiple platforms. Simplified campaign management could reduce barriers for advertisers considering Netflix inventory allocation.

"We see it in our overall sales performance. We've seen an increased programmatic buying. So all of these are consistent with what we are expecting both qualitatively and from a metrics perspective," Peters added, suggesting measurable improvements in advertiser adoption and spending patterns.

The platform's roadmap includes features Netflix positions as competitive advantages over existing advertising technology: "Long term, being on our own stack that improves the speed of our execution to deliver this pretty significant road map of features that we have in front of us. It's things like improved targeting and measurement."

Live programming creates premium advertising opportunities

Netflix's expansion into live programming represents a strategic shift toward content that commands premium advertising rates due to real-time viewership and cultural relevance. The company's live content strategy directly targets advertising revenue typically captured by traditional sports and entertainment broadcasts.

"Our live events have all primarily been in the U.S., keep in mind. So over time, we're going to continue to invest and grow our live capabilities for events around the world in the years ahead," confirmed Co-CEO Ted Sarandos during the earnings discussion.

The earnings call highlighted specific live programming assets expected to generate significant advertising revenue: "We're very excited with the existing strategy. We're excited about the Canelo vs. Crawford fight in September and the SAG Awards and our weekly WWE matches, and the NFL, of course, which is a great property."

Netflix's NFL partnership represents particularly valuable advertising inventory, with Christmas Day games creating appointment viewing that advertisers prize for reaching large audiences simultaneously. "We're happy to have Christmas Day double header, which includes Dallas versus Washington and Detroit versus Minnesota," Sarandos noted.

Live programming's advertising value extends beyond immediate revenue to subscriber acquisition and retention benefits. "What we've seen with live is it has its outsized positive impacts around conversation around acquisition, and we suspect around retention," Sarandos explained.

The company's live programming strategy balances content investment with advertising return expectations: "Anything we chase in the event space or in the sports space has got to make economic sense as well. We bring a lot to the table and the deals that we make ought to reflect that."

Programmatic advertising expansion challenges traditional buyers

Netflix's programmatic advertising capabilities now span multiple demand-side platforms, enabling advertisers to manage Netflix campaigns alongside other digital advertising efforts through familiar interfaces. This expansion represents direct competition with traditional television advertising buying processes.

"We're also going to roll out additional demand sources like Yahoo!, that will further open up the market for us," Peters announced during the earnings call, referencing Netflix's partnership expansion beyond initial programmatic partners.

The programmatic expansion addresses advertiser demands for unified campaign management across multiple platforms and channels. Netflix's integration with major demand-side platforms enables advertisers to allocate budgets programmatically rather than through traditional insertion order processes.

"We're also, I guess, worth noting that we're going to roll out additional demand sources like Yahoo!, that will further open up the market for us," Peters confirmed, indicating continued expansion of programmatic partnerships throughout 2025.

Netflix's programmatic capabilities include features designed to differentiate the platform from traditional television advertising: "It will ultimately allow us to improve the ad experience for our members, which is critically important. So that means better adds personalization."

The personalization capabilities represent Netflix's competitive positioning against television advertising that delivers identical messages to diverse audiences. "So the ads that I see are increasingly different from the ads that say, Ted would see, and they're more relevant for each of us, which is good for us as users and it's good for the brands," Peters explained.

Interactive advertising features target engagement premiums

Netflix plans to introduce interactive advertising formats during the second half of 2025, representing capabilities that traditional television cannot match. Interactive advertising typically commands premium rates due to higher engagement levels compared to passive viewing experiences.

"We're also going to be introducing interactivity in the second half of the year. So that's exciting," Peters revealed during the earnings call, without providing specific details about interactive advertising formats or implementation timeline.

Interactive advertising aligns with Netflix's strategy of leveraging technological capabilities to justify premium advertising rates. The company's platform can deliver features impossible on traditional television while measuring engagement more precisely than linear broadcasting.

The interactive advertising development reflects Netflix's broader platform evolution: "So that's all to say this is a pretty significant milestone for us, one we're super excited to get behind us because now we can shift into the steady release cycle where we're dropping new features all the time, both for advertisers and for members."

Netflix's development approach mirrors its content strategy of continuous feature releases rather than seasonal updates. "And that's the development and release model that we have in other parts of the business. So it's fun to be able to get to that point," Peters noted.

Financial guidance reflects advertising confidence

Netflix increased its full-year revenue guidance to $44.8-$45.2 billion from $43.5-$44.5 billion, with advertising revenue growth contributing to the upward revision. The company's financial projections incorporate expectations of continued advertising business expansion throughout 2025.

"We now forecast 2025 revenue of $44.8-$45.2B, up from $43.5-$44.5B, and a F/X neutral operating margin of 29.5% (vs. 29% previously), or 30% on a reported basis," Netflix stated in its shareholder letter.

CFO Spencer Neumann attributed revenue guidance increases partially to advertising momentum: "And we're also seeing nice momentum in ad sales. Still off a pretty small base, but good growth, and it's on pace to roughly double our revenue in the year, and it's a bit ahead of beginning of year expectations."

The advertising business growth occurs alongside Netflix's subscription revenue expansion, creating dual revenue streams that reduce dependence on subscriber growth alone. This hybrid model positions Netflix differently from pure advertising-dependent platforms or subscription-only services.

"So when we carry all that through to operating margin, our operating expenses are essentially unchanged, which is part of your question. So they're basically unchanged forecast to forecast," Neumann explained, suggesting advertising revenue growth flows directly to profitability improvements.

Market implications challenge traditional television advertising

Netflix's advertising business expansion creates direct competition with traditional television for advertising budgets, particularly as viewing patterns continue shifting toward streaming platforms. The company's scale and engagement metrics position it to capture substantial portions of advertising spending migrating from linear television.

Industry forecasts project streaming TV advertising to surge 19.3% globally in 2025 while linear TV faces 3.4% decline, creating favorable conditions for Netflix's advertising growth objectives. The streaming platform's combination of global reach and proprietary technology infrastructure enables competitive positioning against established television networks.

Netflix's programmatic advertising capabilities align with broader industry trends toward automated media buying. Approximately 72% of marketers plan to increase programmatic investment in 2025, supporting Netflix's technology-focused advertising approach.

The company's measurement and targeting capabilities continue developing through strategic partnerships with advertising technology providers. Netflix recently launched advanced targeting tools in EMEA markets including mood-based audience segmentation, demonstrating sophisticated advertising product development that traditional television cannot match.

Content strategy supports advertising inventory expansion

Netflix's content programming strategy increasingly incorporates advertising-friendly formats, particularly live events and appointment viewing that creates valuable advertising opportunities. The company's content investments directly support advertising revenue objectives rather than serving purely subscription retention purposes.

The earnings call highlighted upcoming content specifically positioned for advertising value: "We're optimistic heading into the second half of the year, with a standout slate that includes Wednesday S2, the Stranger Things finale, the highly anticipated Canelo-Crawford live boxing match, Adam Sandler's Happy Gilmore 2."

Netflix's content strategy balances global programming with advertising market requirements: "We continue to make progress on our key business objectives: In Q2, we had a wide variety of hit series like Squid Game S3, Sirens, Ginny & Georgia S3, The Eternaut and Secrets We Keep, and popular films like Tyler Perry's STRAW and Exterritorial."

The platform's international content success creates advertising opportunities across diverse geographic markets where Netflix operates ad-supported tiers. Global content popularity enables Netflix to offer advertisers access to engaged audiences across multiple countries through unified campaign management.

Timeline

• July 17, 2025: Netflix announces completion of proprietary ad tech rollout and upfront sales success
• July 1, 2025: Netflix activates advanced targeting suite in EMEA including mood targeting
• June 16, 2025: Netflix adds Yahoo DSP as fourth global programmatic advertising partner
• April 18, 2025: Netflix reveals plans to double ad revenue following major tech rollout
• August 21, 2024: Netflix reports 150% increase in upfront commitments

Marketing Technology Glossary

Understanding Netflix's advertising transformation requires familiarity with complex marketing technology concepts that drive modern digital advertising operations. These terms represent the technical infrastructure and strategic approaches that enable Netflix to compete with established advertising platforms.

Programmatic Advertising Programmatic advertising refers to the automated buying and selling of digital advertising inventory through software platforms rather than traditional human negotiations. Netflix's programmatic capabilities enable advertisers to purchase streaming inventory through demand-side platforms using real-time bidding algorithms, data-driven targeting parameters, and automated optimization. This approach reduces manual campaign management while enabling precise audience targeting across Netflix's global streaming platform through integration with major advertising technology providers.

Demand-Side Platform (DSP) A demand-side platform serves as the software interface that enables advertisers and agencies to purchase digital advertising inventory across multiple publishers and ad exchanges through automated bidding processes. Netflix's integration with DSPs like The Trade Desk, Google Display & Video 360, and Yahoo DSP allows advertisers to manage Netflix campaigns alongside other digital media buying through unified dashboards, budget allocation tools, and cross-platform reporting capabilities that streamline campaign management and performance measurement.

First-Party Ad Tech Platform First-party ad tech platforms represent proprietary advertising technology infrastructure owned and operated directly by media companies rather than licensed from external vendors. Netflix's transition from Microsoft's technology to its proprietary Netflix Ads Suite enables the company to retain greater advertising revenue, control advertiser data relationships, implement customized targeting capabilities, and develop unique advertising features that differentiate the platform from competitors while reducing dependency on third-party technology providers.

Upfront Advertising Sales Upfront sales constitute advance advertising commitments typically negotiated annually between major advertisers and media companies for the following year's programming inventory. Netflix's successful upfront negotiations with major agencies represent significant validation of the platform's advertising value proposition, enabling predictable advertising revenue forecasting, premium rate negotiations for high-demand inventory, and strategic partnership development with major brands seeking guaranteed access to Netflix's engaged audience base.

Connected TV (CTV) Advertising Connected TV advertising encompasses digital video advertisements delivered through internet-connected television devices, smart TVs, and streaming platforms rather than traditional broadcast or cable television infrastructure. Netflix's CTV advertising capabilities leverage the platform's streaming technology to deliver targeted advertisements, measure precise viewership metrics, enable programmatic buying processes, and provide interactive advertising features that traditional television broadcasting cannot support through technical limitations.

Supply Path Optimization (SPO) Supply path optimization involves strategic selection of the most efficient routes for advertisers to purchase digital advertising inventory, minimizing intermediary fees and improving campaign performance through direct publisher relationships. Netflix's proprietary advertising platform enables simplified supply paths by reducing technology vendor dependencies, eliminating unnecessary auction participants, improving bid response times, and providing transparent pricing structures that benefit both advertisers seeking cost efficiency and Netflix's revenue optimization objectives.

Ad Tech Stack Ad tech stack refers to the comprehensive collection of advertising technology platforms, tools, and integrations that enable end-to-end advertising campaign management from planning through measurement. Netflix's proprietary ad tech stack encompasses audience targeting capabilities, creative serving infrastructure, measurement and analytics tools, programmatic integration APIs, and campaign optimization algorithms that collectively provide advertisers with sophisticated campaign management capabilities while enabling Netflix to control the complete advertising experience and data relationships.

Interstitial Advertising Formats Interstitial advertising formats represent full-screen advertisements that appear between content segments, during natural viewing breaks, or at strategic engagement moments within streaming experiences. Netflix's planned interactive advertising formats leverage the platform's streaming technology to deliver engaging advertisement experiences that can include clickable elements, extended content previews, product demonstrations, and measurement capabilities that provide detailed engagement analytics beyond traditional television advertising's limited interaction possibilities.

Cross-Platform Attribution Cross-platform attribution involves measuring and analyzing consumer interactions across multiple digital touchpoints to understand advertising campaign effectiveness and optimize budget allocation decisions. Netflix's advertising measurement capabilities enable advertisers to track viewer engagement from initial advertisement exposure through subsequent actions across websites, mobile applications, and offline purchases, providing comprehensive campaign performance analysis that traditional television advertising cannot deliver through technical and measurement limitations.

Programmatic Guaranteed Buying Programmatic guaranteed represents automated advertising inventory purchasing that combines programmatic technology efficiency with guaranteed impression delivery and fixed pricing structures traditionally associated with direct sales negotiations. Netflix's programmatic guaranteed capabilities enable advertisers to secure specific advertising inventory commitments through automated platforms while maintaining predictable campaign delivery, premium content placement guarantees, and simplified buying processes that reduce manual negotiation requirements while preserving campaign control and performance predictability.

Summary

Who: Netflix executives Greg Peters and Spencer Neumann led advertising-focused earnings discussions, emphasizing the platform's transformation from Microsoft-dependent technology to proprietary advertising infrastructure.

What: Netflix completed global rollout of its proprietary Netflix Ads Suite, closed majority of US upfront advertising deals with major agencies, and declared intentions to "roughly double" advertising revenue in 2025 through enhanced targeting and programmatic capabilities.

When: The July 17, 2025 earnings announcement covered Q2 2025 performance while outlining advertising expansion plans for the remainder of 2025, including interactive advertising features launching in the second half.

Where: The advertising technology deployment spans all 13 countries where Netflix offers ad-supported streaming, with programmatic capabilities now available through multiple demand-side platforms including The Trade Desk, Google DV360, Microsoft, Magnite, and Yahoo DSP.

Why: Netflix's aggressive advertising expansion directly challenges traditional television for advertising budgets while creating dual revenue streams that reduce dependence on subscription growth, positioning the company to capture shares of the $240 billion global video advertising market through proprietary technology and premium content offerings.