Segmenting subscribers & launching an ad tier To boost revenue and attract more subscribers, Netflix offers a range of subscription plans which are 'Standard with adverts', 'Standard' and 'Premium'. The launch of the lower-cost subscription in November 2022 was intended to attract more cost- conscious users after a sharp decline in the first half of the year when the subscriber base fell by 1.2 million amid a rocky global economy and growing competition. The brand also clamped down on 'password sharing' in subscriptions as it wants to limit the number of devices people can use to access their service. It sent letters to subscribers that shared their passwords outside their household as this can now only be allowed by paying for an extra user each month. "Netflix is balancing new ad revenue coming in with the potential of subscription revenue being lost from existing users downgrading," says Wedbush Securities media analyst, Michael Pachter to TIME magazine. "But it's going to take some time for the advertising business to fully monetize." The 'Basic with Ads' is the cheapest plan at $6.99 a month as it shows advertising and only allows it to be used on one device. In contrast, the 'Premium' plan is $22.99 a month with no ads and enables HD, and 4K Ultra HK along with four streams at once. However, brands have been clamoring to advertise on Netflix for years due to its vast audience base. Netflix said it had at least 23 million "highly engaged" users on the ad supported plan worldwide with ad-supported memberships rising 65% in Q1 2024 and accounting for 40% of new signups according to eMarketer. While advertisers voiced their frustration with the lack of targeting and measurement on the ad platform initially, Netflix revealed it has chosen Nielsen's DAR for audience measurement, DoubleVerify and Integral Ad Science for ad verification and outcomes-based measurement provider EDO. The company also unveiled sponsorship opportunities to buy pre-roll spots for specific shows and shared plans to run campaigns tied to holidays so buyers can target audiences when they're most engaged. Customer data & personalization When it comes to data, Netflix knows what it's doing. The streaming service collects a huge amount of data every day - and unlike many brands puts every piece of information to use; to create a better customer journey using Al, to create a content library that feels personal to a user. What's important is how they analyze and measure their data. Netflix appears to constantly learn from the information it gets and changes to drive better performance and make its content work harder. For example, before 2019, Netflix counted 70 percent completion of an episode or movie as a 'view', its main engagement metric. At the end of 2019, it changed a 'view' to 'any watch time' of two minutes or longer. In 2021, the metric changed again, moving away from the 'number of views' to 'minutes watched' as reported in Entrepreneur. Credited with introducing 'binge watching', Netflix uses clever tactics to keep subscribers on the service. They use auto-play so a new episode starts automatically without any clicking or action on the user's part. If a series or movie is finished, similar recommendations are offered to push people to watch something else. Netflix launched a 'Top 10 on Netflix' website, a place to showcase its most popular content broken down into global and country-specific lists. The metric used for these lists is 'engagement as measured by hours viewed' as the company believes it's "a strong indicator of a title's popularity, as well as overall member satisfaction".
1.The Unstoppable Success of Netflix
Despite powerful competitors snapping at its heels, Netflix is a force to be reckoned with in the
streaming and entertainment world. The subscription-based streaming service has over 270 million
paid subscribers and reported a revenue of over $9.4 billion in the first quarter of 2024 according to
Statista. Those are some eye-opening numbers to contend with and the brand shows no intention of
slowing down. You just need to look at its content over the years to see its rising success:
Bridgerton, Stranger Things, Emily in Paris, Wednesday, Dahmer, Yellowstone, Squid Game and
Money Heist. Plus, its use of artificial intelligence algorithms enables Netflix to personalize the user
experience in a way that other companies envy (and many hail as a great example of using AI in
marketing). Its AI engine is so successful over 80% of the shows people watch on the platform are
based on its personal recommendation’s platform. Let’s look at how the streaming giant's marketing
strategy has changed over the years and where it stands in the face of powerful rivals like Disney+,
Amazon Prime Video, and Apple TV+.
2.What makes Netflix so successful?
In essence, Netflix’s success is due to the brand’s ability to evolve and the speed at which it does so. It’s this ability to pivot that has enabled its marketing strategy to change and move away from longheld beliefs such as ‘ad spending not resulting in more viewers’.Another driving success factor is its technology. Netflix's recommendation engine was created to do one key thing - drive personalization. Its goal is to ensure that subscribers get the content they want and are interested in. This requires the collection of data and the creation of tailored customer
journeys for every user. That’s no small feat. Another key reason is the content. Netflix invests a huge amount of money in original content. This vision and investment have seen it create hit shows and get nominations and wins for Oscars, Emmys, BAFTAs, SAGs, Golden Globes, and even Grammys.
3.A pivot from the ‘brand’ to the content - Netflix’s marketing budget has remained fairly consistent at around the 2 billion mark. However, the way in which Netflix spends money is changing. The marketing strategy has moved from a focus on the brand itself to shining a light on individual titles, according to the New York Times. Original content is also a focus with most of its $17 billion content budget going towards its creation despite licensed shows like Seinfeld or Grey's Anatomy up for grabs, reports Fortune. Take ‘Wednesday’, a spin-off Addams Family-inspired show featuring Jenna Ortega. Along with advertising in airports and on the Uber app, Netflix shifted money from Twitter and Instagram to TikTok after a scene of Wednesday dancing was copied by others and went viral with Lady Gaga even getting in on the act! Season 2 is on the way soon due to its success. “I’m trying to enable creativity, because I want to bring all of this content to more people around the world,” Lee Dicus said. “I also want the rest of Netflix to understand what the marketing strategy is: We support the
content organization.” The point is that Netflix is now more focused on the content that’s being
produced while embracing both new (TikTok) and old (billboards) channels to do that.
POINTS 4 AND 5 ARE ATTACHED. THANK YOU SO MUCH
Netflix: Wrap-up
There’s no doubt that streaming is popular, but it’s also a very competitive space. While Netflix
currently has the edge, the brand knows it needs to keep innovating to keep that coveted position.
Let’s recap the key reasons Netflix is such a successful brand. It:
• Uses data to understand customers and inform content creation
• Taps into trends and social media conversations
• Is not afraid to use humor in its messaging
• When a show becomes a hit, the brand capitalizes on it
• Encourages customer engagement
• Listens to feedback and works on solutions
• Combines traditional and digital marketing tactics in interesting ways
• Sets metrics and constantly tracks performance
There’s little doubt that Netflix will keep growing and evolving based on internal and external factors.
The crucial factor in its success is that it wants to keep getting better and is prepared to do the work
to get there.
1.3 Determine the potential challenges Netflix might face as it continues to segment its
subscribers and launch ad-supported tiers.
1.4 Examine how Netflix uses customer data to enhance content creation and viewer
engagement.
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