Netflix marketing … driven by data, built around digital engagement, loved by millennials

March 30, 2018

Netflix is the brand most loved by millennials, according to YouGov BrandIndex.

In January, Netflix announced that they would increase their marketing budget by 54% from $1.3 billion to $2 billion in order to “amplify the value of the content,” according to The Wall Street Journal.

Netflix has an abundance of data about its customers and their viewing habits, which will help them tailor their marketing strategies and amplify personalization down the road. Netflix’s software tailors content recommendations to its users based on what they watch, and how they watch it. This goes beyond the genres users lean towards. Is the user a binge-watcher? Do they watch on a laptop or a television screen? Do they use subtitles? Do they save series for offline viewing and watch them on the go?

Netflix is actively monitoring when, where, and how people consume their series and movies and now focuses on how their habits are changing. A data set released in November 2017 claimed that 67 percent of Americans now watch Netflix outside of their homes, a figure that, according to Eddy Wu, Netflix’s director of product innovation, conveys that “Netflixing in public has become a social norm.” If people are seen using the service in public of their own accord, they essentially become an advertisement to prompt others to do the same, which contributed to the practice becoming so common so quickly.

As a result, Netflix does not need to rely on agencies, and in particular data-driven agencies, to guide its marketing. With an in-house approach, the increased marketing spend is still dwarfed by the $8 billion it plans to spend on content — including 80 new original films — in 2018.

Netflix declined to discuss its marketing strategy, but analysts and agency executives believe Netflix’s marketing budget increase aligns with its content strategy, and they expect most of Netflix’s ad dollars to go to digital, especially programmatic, as well as to offline events to generate earned media. The streaming service is known to handle most media buys in-house, although MEC is Netflix’s major media shop, they said.

“Netflix is a performance marketer. Data is everything, with which Netflix makes marketing less subjective,” said Brian Wieser, senior research analyst for Pivotal Research Group. “I think Netflix will spend its increased marketing budget mostly on digital media. But keep in mind, most of its growth is international, so I’m sure there will be different [media-buying] choices by market.”

Programmatic is an area in which Netflix is likely to keep spending more. In a letter to shareholders last April, Netflix said it was investing more in programmatic as part of its $1 billion-plus marketing spend, with the goal of improving its ability to “do individualized marketing at scale and to deliver the right ad to the right person at the right time.” Speaking on condition of anonymity, one major ad exchange said Netflix has been among the top 10 brand spenders on the exchange over the past three years, and the streaming service will maintain that position based on its buying patterns. Netflix primarily uses Google DoubleClick Bid Manager to buy media programmatically, according to the exchange.

Netflix’s hands-on approach is not limited to programmatic. Since the streaming service is a tech-centric company, it has developed its own marketing model and is used to processing internal data on its own. Because of that, media agencies are usually only responsible for campaign execution, instead of developing strategic media planning for Netflix, according to Wieser. “Netflix works with media agencies on something that it can’t do efficiently on its own, like buy TV or out of home,” he said.

Netflix has even brought some creative work in-house. Robert Green, chief creative officer for Ripple Collective, has worked on ad campaigns for Netflix before and said the company is unique because it lets a group of marketers run advertising in-house. “That means you have people who are focused on outcomes helping to craft and create campaigns, rather than having more purely creatives at that stage of the work,” said Green. “And also uniquely — though this is changing more and more — the majority of the campaigns would [take place] on the Netflix platform itself, with some outdoor to augment but very little else in the way of media buys.”

As Netflix plans to create more original films, Green believes the company will need to spend more on TV, out-of-home and digital series to promote its movies, just like other movie studios. Lauren Tetuan, evp and media director for Deutsch, thinks that as a performance marketer, Netflix has developed — and will continue to develop — innovative marketing strategies, from social media to events marketing to offline installations, to reach a broader audience.

“It is a balance of maintaining and attracting new subscribers with driving viewership of new content,” said Tetuan. “Netflix is now competing with the major studios, not just Hulu and other streaming services, so a big piece of the plan is orchestrated around getting people to watch its growing portfolio of original content.”

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