Netflix’s ad biz accelerates — what’s next as AI, M&A opportunities loom

Core Insights - Netflix is in the "walk" phase of its "crawl-walk-run" advertising framework, having achieved scale and launched its first-party ad tech stack in 12 ad markets [3] - The company generated approximately $650 million in U.S. advertising revenue in 2024, with projections of at least $1.3 billion in 2025, indicating a significant growth trajectory [4] - Netflix's U.S. upfront commitments doubled in Q3 2025, marking its best ad sales quarter to date [8] Advertising Strategy - Executives emphasized the importance of increasing advertiser diversity and enhancing ad purchasing methods, including partnerships with Amazon DSP and AJA in Japan [6] - The company is focused on improving data-driven targeting, media planning, and measurement capabilities, with plans to introduce ad interactivity later this quarter [6] - Netflix is leveraging artificial intelligence to test various ad formats, aiming to enhance its advertising offerings [8] Financial Performance - Despite a hit to operating margin due to a dispute with Brazilian tax authorities, Netflix's Q3 revenue growth aligned with internal forecasts, indicating resilience in its core business [7] - The company remains optimistic about profitable growth in both its core and advertising segments amid a changing media landscape [8]