Tide Pod shout-outs onscreen. Flirtatious exchanges with companies on Twitter. Netflix may not run ads, but it has become a coveted marketing platform.
Netflix subscribers like being able to glide through entire seasons of “Stranger Things” and “The Crown” without sitting through commercials for insurance and S.U.V.s with bows on the hood. Subscriptions, rather than advertising, drive its nearly $16 billion in annual revenue, and being commercial-free “remains a deep part of our brand proposition,” Netflix said in a statement.
While it is the dominant streaming platform, with 158 million global subscribers, Netflix also has a $12 billion pile of debt. And it is facing competition from deep-pocketed streaming newcomers like the Walt Disney Company and Apple. The research firm eMarketer said this month that Netflix’s “days at the top may be numbered,” and many analysts and executives wonder if, in order to keep its revenue strong, it will have to embrace ads.
“I don’t know why they wouldn’t,” said Peter Naylor, the head of advertising sales for the streaming platform Hulu.
Even as Netflix resists commercials, it is finding ways to work with brands. Last month, Netflix worked with the sandwich chain Subway to start offering a Green Eggs and Ham Sub (spinach-dyed eggs, sliced ham, guacamole, cheese) tied to the new Netflix series “Green Eggs and Ham,” based on the Dr. Seuss book. The sandwich generated a lot of publicity for Netflix in the lifestyle press while also putting the Netflix name in front of the millions of people who buy a Subway sandwich each day.
“We believe we will have a more valuable business in the long term,” Netflix said, “by staying out of competing for ad revenue and instead entirely focusing on competing for viewer satisfaction.”
In another recent cross-promotion, Netflix charged the clothing company Diesel a license fee to make outfits inspired by “La Casa de Papel,” one of Netflix’s most popular shows. Online ads from Diesel hammered home the connection by showing the Netflix name, mentioning “La Casa de Papel” and featuring characters in the distinctive red jumpsuits worn by the show’s protagonists.
Netflix is “actively beefing up its marketing team,” according to the research firm Forrester. “They’re being more flexible in the types of partnerships they can offer,” said Ellie Bamford, an executive at the marketing agency R/GA.
When Netflix worked with Samsung and Aviation American Gin on a commercial last month featuring the actor Ryan Reynolds and his new Netflix film “6 Underground,” no money changed hands. For Netflix, such deals are mostly about keeping people aware of the Netflix brand.
Netflix declined to say whether deals with companies would become a larger revenue stream in the future.
But companies have long been eager to go into business with Netflix, even before it scored 34 Golden Globe nominations this month. The platform has something brands crave: a young audience. Its average viewer is 31, part of a group highly sought by companies as younger people avoid broadcast and cable television and are known to hate ads.
“Brands want to be in front of this audience,” Ms. Bamford said. “Reaching these unreachables, these cord-cutters who don’t want to be fed an ad, is a huge concern.”
Major companies flirt with Netflix on social media, and Netflix is flirting back. This month, the company’s Twitter account, with seven million followers, participated in a saucy meme about things people say during sex, trading quips about it with the Wendy’s Twitter account (3.4 million followers) and Penguin Random House (1.3 million followers). Last spring, Netflix posted a tweet that included a photo of nine cast members from one of its original shows, “Sense8,” as they appeared to be celebrating in an Audi convertible, and then had a joking exchange about it with the Audi account (two million followers).
In contrast to its cheery social-media tone, Netflix is “not necessarily the easiest to work with” on promotional partnerships with companies, said Stacy Jones, the chief executive of the entertainment marketing company Hollywood Branded. She described Netflix as “very picky,” saying it “wants to be the lead.”
“They’re in a power position right now,” Ms. Jones said. “They know the market, and they’re controlling it and keeping it very tight.”
Source: The New York Times | Read more
