Netflix tweaks marketing ahead of streaming wars
In Q2 2019, Netflix reported its first drop in domestic subscribers in nearly a decade. As Netflix sought to shore up subscriber numbers in the quarter following the poorer-than-expected period, Comperemedia observed some shifts in its marketing strategy. The provider increased win-back emails and shifted its Facebook creative strategy to put more emphasis on the breadth of its content, as well as highlight its 30-day free trial. As more streaming providers enter the marketplace, Netflix will need to counter pessimistic press and put a greater emphasis on client retention.
Win back + free trials
Netflix responded to customer losses with an influx of win-back emails in Aug. and Sep. of this year. It is likely that subscribers who stuck around (or re-subscribed) for July’s “Stranger Things” Season Three release were dropping the platform at a higher rate in Aug. As observed by Mintel ePerformance/eDataSource, Netflix sent emails imploring former users to “come back today” at a higher volume in Aug. than in any other month in 2019. Win back volumes remained elevated in Sept, and approximately one-third of Q3 win back emails offered returning subscribers another free trial.
Netflix has been prioritizing its free trial, plus its breadth of content, in Facebook ads, as well. According to Pathmatics, Facebook has been Netflix’s preferred digital advertising channel in 2019. Where its Facebook video ads previously highlighted a Netflix original movie or series, the Q3 2019 creative featured a wider breadth of content, and more prominently highlighted the 30-day trial.
https://www.facebook.com/netflix/videos/2382549795168315/
Disney blocks Netflix
The latest development in the streaming wars came in early October, when Disney announced it would no longer run Netflix ads on its TV networks, except ESPN. To understand just how big of an impact this could have on Netflix, we looked at the provider’s national ad spend by network for the first half of 2019. According to Mediaradar, ABC was one of Netflix’s top networks in the first half of 2019, with an estimated 20% of its national TV ad spend funneled to the broadcast network. In particular, Netflix increased spending at ABC, as well as other networks, in January and February, when it was using TV commercials to drum up buzz for its original film Roma ahead of the Academy Awards. Getting blocked from ABC and other Disney networks probably won’t impact Netflix’s chances at the Academy Awards next year (after all, the company uses plenty of other marketing channels to impress the Academy), but it may have an impact on general awareness of some of its top-tier content.
Netflix has a negative press issue
When searching an innocuous Netflix-related string of keywords, such as “Netflix Q2 2019 earnings,” Google displays a list of “people also ask” questions riddled with negative topics, such as “Is Netflix going to shut down?” These questions are a direct reflection of the news stories that have been swirling around Netflix all summer. Netflix might consider a full-scale PR campaign to counter these negative headlines and reassure consumers that it’s not going anywhere.
What’s next?
Netflix hasn’t really had significant streaming video competition yet (as it seems to coexist well with Hulu and HBO), which is why the media has been openly questioning how the company will fare once it faces competition from big names entering the market, namely Disney. These concerns are not unfounded, but Netflix has an opportunity to try new approaches to satisfy its subscribers and keep them around as Disney, Apple and others enter the fold. It is likely that many consumers will continue to use Netflix, even as they pick up an additional service or two, provided that they continue to find value in Netflix.
We expect that Netflix will introduce new methods of driving loyalty in order to maintain a healthy subscriber base as the landscape changes. Stay tuned for our 2020 Telecom and Media Trends, in which we explore this idea in more detail.
