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https://i-invdn-com.investing.com/news/2af302cbecff10d63ab1791c6d04f3de_M.jpgNetflix (NASDAQ:NFLX) shares fell more than 9% Thursday after a report by Digiday said the streamer’s advertising business is off to a slow start.
The online trade magazine for online media said five agency executives revealed Netflix is falling short of its guarantees made to advertisers for ad-supported viewership and is letting advertisers take money back for ads yet to run.
While they stated the specifics vary by advertiser, the executives are said to have told the publication that, in some cases, the streaming giant has delivered just 80% of the expected audience.
One of the executives told Digiday that “they can’t deliver” and don’t have enough inventory to deliver so they are “literally giving the money back.”
The ad deals are reportedly structured on a pay-on-delivery basis, with advertisers only spending for the viewers reached, with Netflix releasing unspent ad dollars at the end of the quarter.
Advertisers taking their money back generally include companies running marketing pushes at specific times for the current season. However, some advertisers have asked to move their ad dollars to the first quarter of 2023 or later in the year.
Netflix shares have had a tough year, currently down more than 50% in 2022, despite the recent share price gain.