Netflix praises ’emotive’ marketing for revenue boost

Netflix has praised a shift from direct response to more “emotive” and content-led marketing for boosting its revenues in its first quarter.

Netflix House of Cards
Marketing to herald the return of House of Cards helped boost Netflix’s revenues in its first quarter.

Revenue generated by its 48 million subscribers for the three months to 31 March grew 24 per cent year on year to $1.27bn. Operating income in the period lifted to $97.6m, up from $31.8m the previous year.

Marketing expenses in the quarter increased 15 per cent to $137m, with activity in the period focusing on launching the second series of US political drama House of Cards and brand marketing campaigns to support Netflix’s expansion into new territories.

Those campaigns formed part of a global brand platform, which Netflix says highlights the many ways people find “delight” in the service’s experience.

Netflix says it will continue this strategy in the second quarter, with a “significant push” behind the global launch of the second series of Orange is the New Black on 6 June. It also plans to introduce a $1-$2 price increase for new users, which it says it will invest back into content.

Speaking on a call with analysts, Netflix CEO Reed Hastings said: “[Our]advertising strategy [has been] evolving towards more emotive and brand and content and away from direct response, as we realised through testing that we don’t need to be running around saying ‘Netflix free trial’ nearly as much. That’s very commercial and reductionist.

“And by focusing on the core elements of member satisfaction and the content that you get if you joined Netflix we can get to a much bigger market share and a better connection with members. Then when they come to our website and see that they get a free trial, they are doubly happy, but that’s not the core reason to come to Netflix.”

Hastings also referenced competitors, particularly Amazon, which rebranded its LoveFilm Instant streaming service to Amazon Prime Instant Video in the UK and Germany in the quarter.

A recent report from media consultancy Decipher showed the rebrand appears to have dented Amazon’s subscriber numbers over the past six months, while Netflix’s subscriber base has increased. 

Hastings, however, said the competitive streaming market is not a “zero sum game”.

He added: “We are building this ecosystem together that’s about internet video, and the more players there are in internet video, the bigger that ecosystem gets. In the big theme is internet video is taking share away from linear video. So we are all participating in that transformation.”

Netflix does not strip out UK numbers, but Hastings said the company was “confident of [its] success” in the region, which has given it “big ambition” for its next round of European expansion.

In March former Vodafone and Starbucks marketer Danielle Davies – previously known as Danielle Crook – joined Netflix as its European marketing director.

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