Commentary

Netflix Ups Marketing Budget To $1 Billion

Netflix is planning to add 20 new TV shows and movies to its streaming lineup. How many can you name?

If you are not a current Netflix U.S. subscriber — about 54% of U.S. adults said they have Netflix in their households, according to Leichtman Research Group — you may not. There are an estimated 119 million total U.S. TV homes, per Nielsen.

Netflix has been advertising on national TV networks — but may not be reaching its potential and existing consumers. In 2016, according to its 10K SEC filing, total advertising expenses were $842.4 million.

The company intends to spend around $1 billion in total marketing expenses this year. When it comes to expenses on new TV and movie content, Netflix looks to spend $6 billion this year, with little sign of slowing down its creative effort.

One area of increasing concern might be where Netflix will promote that content and its brand-centric message.

As for program specifics, Netflix’s massive first-party subscriber data reveals a lot, according to the company. What works and what doesn’t once the show — typically an entire season worth of, say, 13 episodes —  is released.

As a comparison to where Netflix is going, consider the growth of HBO over the last several decades.

For a long time, the Time Warner premium cable, no-ads channel advertised its shows on broadcast network TV. Initially, the broadcast networks may have had a viewing concern, seeing HBO as competition. But eventually, they chose to take the entertainment marketing money. (That said, broadcast networks still don’t allow each other to buy TV commercial time from one another.)

Still, even with an HBO or Showtime, there is one major rule for promoting TV shows. Broadcast networks will shy away from accepting TV advertising touting a specific day and time for a series. (They don't want TV viewers tuning out from the network they are watching.)

Now with on-demand programming, all this is less of an issue — for both buyers and sellers. The new TV environment and viewing behavior isn’t going away.

The good news is that even with many premium digital video alternatives, traditional linear TV networks still command the lion’s share of TV viewing. Moreover, network TV viewers will also watch their shows on a digital platform.

That means there will be a continued evolving frenemy dance among traditional and new TV services.

1 comment about "Netflix Ups Marketing Budget To $1 Billion".
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  1. Bill Shane from Eastlan Ratings, September 13, 2017 at 3:11 p.m.

    Too aggressive IMHO.  The cost of a quality TV show is too much to unleash 20 at once and couple it with the attitude that some of the spaghetti will stick.  As to where Netflix should advertise, put like show dollars into both broadcast and cable.  See what sticks!  

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