Hits to videos on Netflix have doubled year over year but the online network’s marketing spend has increased by just 19%.
New analysis from marketing agency J.W. Alexander reveals that while the number of views accrued by Netflix’s award-winning series House of Cards and Stranger Things has risen significantly, so has Netflix’s marketing budget. In 2020, Netflix’s marketing spend reached £16.2m, an increase of £4.2m from the year before.
While Netflix has established itself as a global powerhouse with 27.7 million U.S. subscribers and a further 14.2 million households watching TV shows and films via its platforms, the company hasn’t enjoyed the best of luck in North America, where the stock has dropped 71% since its all-time high in early 2019.
Netflix’s share price today is almost three times what it was worth ten years ago. The company’s strong international presence and expanding content budget means it can continue to grow its business, even in a difficult environment. With its share price at a four-year high and its latest earnings report revealing strong growth in its international markets, coupled with increased competition and more people watching video on their smartphones, it’s a good time to take a look at the streaming giant’s marketing spending and its digital marketing strategy.
With consumers increasingly turning to digital spaces to research and consume content, brands must adapt their marketing strategies to reach potential customers wherever they are online.
According to MarketingCharts, an estimated 78.2% of U.S. adults now use some form of digital media to research products or companies before purchasing or using them. Further illustrating the growing importance digital media has come to play in marketing, 82.2% of Gen Z use various digital platforms.
As a result, many businesses have shifted their focus away from traditional advertising, which has steadily declined in popularity, to embrace more digital and data-driven marketing efforts.
That being said, not all digital platforms are created equal, with video becoming an especially popular mode of content across all platforms.
The video landscape is changing as platforms like YouTube introduce new metrics to determine video’s success, as well as updated ways to monetize content. All of which can impact a brand’s video marketing strategy and budget.
Video is the most popular type of content on TikTok, where people can watch and comment on short-form videos. Videos on TikTok can be shared through social media platforms like Facebook and Instagram, where people can click through to a brand’s website or visit the store to make a purchase. Videos can also be accessed on mobile websites or through mobile apps.
According to HubSpot Blogs research, 59% of people on TikTok report that watching videos on the platform led them to make a purchase, compared to 27% who were attracted to social media platforms like Instagram and 25% who were drawn to content posted on websites.
This trend is apparent across all generations, as even 35% of Gen Z report that a video led them to make a purchase. Video isn’t just limited to social media platforms though, as a third of all adults use TikTok to access content on their phone. This means that videos can be accessed through multiple platforms, which increases the reach of a brand’s video marketing campaign.
Beyond making a purchase, videos can also make a difference in a customer’s opinion of a brand or a product. As we’ve established, people love to share their opinions on social media platforms. However, if a customer finds the information they’re looking for on a video site, that content will still be there when they return.
This means that if a customer does click on a link or see a flash sale in the first place, that content will usually be the only thing they remember about the brand or product, rather than any advertising that may have accompanied it. In the case of retailers, videos allow customers to see product samples, in-store promotions and how to use the item or service, which can increase the likelihood of that customer coming back for more.
As the name would suggest, mobile marketing (also known as m-marketing) is the practice of marketing a brand or product via mobile phones and other portable digital devices. While desktop computers and laptops are still the most popular way of accessing the Internet, mobile phones, which make up 24% of the global market, are the most popular way of engaging with the digital world.
A 2019 report from the United Nations estimated that there were 4.9 billion internet users worldwide, globally, as of 2019. Of these, 2.7 billion used mobile phones and 1.8 billion used desktop computers. This means that there are more digital devices in the world than there are people to use them!
According to a study from digital marketing agency Mindcraft, 83% of Gen Z use mobile phones and 79% use digital devices (e.g. laptops, tablets and desktop computers) to access the Internet. Further illustrating the trend, 75% of millennials use their phones in the same manner as older generations did, meaning that they consult digital devices for information and use them to access social media.
In 2019, 81% of Gen Z and 78% of millennials reported that they sometimes watched TV commercials to learn about a product or service, as opposed to relying solely on online research, according to a report from HubSpot Blogs. Further evidence that consumers are turning to traditional television to gather information about products and companies comes from the 2020 Unified Marketing Profiling Report, which found that 76% of global respondents get product information from commercials or brand activations on TV.
Many companies use television advertising to introduce their products to the general public and try to establish brand awareness. Since people are already paying attention when commercials are aired, these ads can be highly cost-effective. That is, provided the right tools are in place to measure the impact of such an ad strategy.
MarketingCharts reports that people aged between 50 and 64 still make up the largest audience on most social media platforms. This demographic is often referred to as being in the ‘sandwich generation’ or ‘generation me’ due to their hybrid role as consumers and parents.
While this audience may not always be the most motivated to buy a product or service, they can be highly influenced by advertising. This is because they are the demographic most likely to have a television in their home and remember advertisements from their formative years.
If advertising on TV and online turns out to be effective, marketers can continue to target this audience on social media platforms and through digital marketing campaigns. Further down the line, these consumers could become customers or potential customers for a brand or product.
Consumers’ Attention Spans
Thanks to the rise of TikTok, people are now more likely to see shorter-form videos that often include celebrities, influencers and other famous personalities. This has resulted in audiences’ having shorter attention spans, as the average attention span of an adult is eight seconds, according to HubSpot Blogs research.
This means that if a video marketer can keep their video short, snappy and engaging, they’re more likely to have a positive impact on a consumer’s opinion of a brand or product. Ideally, these videos will also make them interested in your product or service, leading them to take action, such as making a purchase or requesting more information. Short-form videos have exploded in popularity over the past year, which illustrates the need for marketers to consider this format if they want to effectively promote a brand or product.
Along these lines, HubSpot Blogs recommends creating videos that are concise but also provide value. Short-form videos that provide information can be highly effective on social media platforms such as TikTok and Instagram, as well as on websites.