Alongside a story that claims the company is allowing refunds to advertisers after missing certain viewing commitments on its new ad-supported service tier, Netflix stock (NASDAQ:NFLX) is trading 6.8% down on Thursday morning, putting it on track for its most significant one-day decline since September.
According to Digiday, which cites advertising agency executives, the streamer reportedly enables certain advertisers to refund payments for advertisements that have not yet been shown due to the mistake.
This is a component of Netflix’s ground-breaking “pay on delivery” strategy, which lets advertisers only pay when customers view their material. This is in contrast to the strategy used by traditional television, which involves saving money and relying on “make-goods” later to make up for unmet viewership guarantees.
According to the survey, not all marketers have recovered monies and those that have often had holiday-timed ads and want to reallocate money before the end of the year. However, Netflix stock needs to catch up to the audience varying degrees, it has kept the promises it has made to itself; in some cases, it delivers around 80% of the viewers who anticipated it.
Despite the announcement, executives at advertising agencies believe that the result is due more to Netflix’s fast introduction of its advertising business than any long-term plan.
Netflix has given indications throughout this year that it would join the sector with caution and then gradually build it. However, it has also been criticized for having “hubris” concerning its aggressive price and the measuring claims it makes.
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