Netflix to Integrate AI-Generated Ads in 2026, Aims to Double Ad Revenue by 2025

Netflix has announced its intention to leverage generative AI to integrate interactive advertisements within its streaming content. The company plans to deploy this technology across its midroll and pause ad formats, starting next year. This move is part of Netflix's broader strategy to enhance its ad-supported tier, which was launched in 2022 and currently has 94 million subscribers worldwide out of a total of 300 million subscribers.

The new ad product will utilize generative AI to match advertiser content with relevant programming on the platform. This approach aims to create more engaging and contextually appropriate advertisements, thereby increasing viewer engagement. Amy Reinhard, president of advertising at Netflix, highlighted that Netflix subscribers are highly engaged, with ad-supported subscribers spending an average of 41 hours a month on the platform. She noted that subscribers pay as much attention to midroll ads as they do to the shows and movies themselves, underscoring the potential effectiveness of this new ad strategy.

This is not Netflix's first foray into generative AI. Earlier this month, the company announced a partnership with OpenAI, the creator of ChatGPT, to develop an AI-powered search feature. This feature will enable viewers to request personalized recommendations using natural language, further enhancing the user experience on the platform.

Netflix's use of generative AI in advertising is part of a broader trend in the creative industries. Other companies, such as British broadcaster ITV, have also explored the use of generative AI to make advertising more accessible to small businesses. However, the implementation of AI in advertising has not been without challenges, as seen in the case of the BBC's plans to use AI for marketing materials for "Doctor Who," which were abandoned due to viewer complaints.

Netflix plans to roll out the new AI-generated ads in 2026 to all countries that offer its ad-supported subscription plan. The company aims to double its ad revenue in 2025, indicating a significant focus on growing its advertising business. This move is expected to involve extensive testing and refinement to ensure the effectiveness and acceptability of the new ad formats among subscribers.