Netflix gave a detailed explanation of why it won't sell advertising, but it's still working with brands in other ways
- Netflix on Tuesday gave its most detailed explanation yet for why it won't sell advertising.
- It doesn't want to spend money trying to challenge online-advertising giants like Google and Facebook, CEO Reed Hastings said.
- It also wants "none of the controversy around exploiting users with advertising," Hastings said.
- Still, Netflix has been cozying up to brands in other ways, including more product placements, brand partnerships, and consumer products, as Business Insider has covered closely.
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Netflix is beefing up its explanation for why it won't sell advertising, as a small contingent of Wall Street firms continue to push the company to consider new revenue streams.
Netflix has said it will not sell ads because doing so would damage its ad-free brand proposition.
CEO Reed Hastings added on Tuesday that building a meaningful advertising business would require challenging online-ad behemoths like Google, Facebook, and Amazon. Such a feat wouldn't come cheap.
"There's not easy money there," Hastings said during Netflix fourth-quarter earnings video. "They're integrating so much data from so many sources ... To keep up with those giants, you've got to spend very heavily on that and track locations and all kinds of other things that we're not interested in doing."
Hastings also pointed to the regulatory risks around ad targeting that have arisen as regions like the European Union and US state of California adopt new data-privacy laws, and US politicians push to break up big tech companies, in part, because of the immense user data they control.
"We want to be the safe respite where you can explore; you can get stimulated, have fun, enjoy, relax and have none of the controversy around exploiting users with advertising," Hastings said.
Nevertheless, other streaming services like Hulu have successfully built advertising businesses. And forthcoming platforms like NBCUniversal's Peacock and the mobile-video startup Quibi are forgoing Netflix's subscription-only model for a hybrid model that includes both subscriptions and advertising. Dual revenue streams have also historically been the bedrock of the television industry, allowing it to fund expensive programming.
Netflix has also been cozying up to brands in other ways, including more product placements, brand partnerships, and consumer products, as Business Insider has covered closely.
The streaming company is building out its consumer-products team that partners with companies like Ben & Jerry's and Nike on products that promote the Netflix brand. It's also co-marketing its originals with brands like Baskin-Robbins and Burger King to reach like-minded audiences that aren't yet on Netflix.
Below is a list of stories Business Insider has published that give a glimpse into Netflix's relationships with brands, and what it's competition is up to. The stories are organized by topic.
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The Netflix teams shaping its work with brands
- A top Netflix content exec has added consumer products to her purview, as the team staffs up
- The 2 power players at Netflix who are leading its early marketing work with brands like Coca-Cola and Lyft
- A key exec on Netflix's brand-partnerships team has quietly exited the company
Netflix and advertising
- Netflix must launch a cheaper, ad-supported plan to combat Disney, Apple, and Amazon, according to a Wall Street analyst
- Netflix calls speculation that it's moving into selling advertising 'false'
- Netflix could drastically cut its cash burn with a Spotify-like model that includes an ad-supported free tier
Netflix's partnership strategy
- How Netflix's experimental approach to marketing tie-ins creates new opportunities for small and mid-sized brands
- 'It gives a sense of elitism': Netflix is pioneering brand deals for streaming TV, but some partners bemoan its approach
- Netflix doesn't want to 'get distracted' by trying to make money directly from deals with brands like Coca-Cola and Nike
- Coca-Cola was the biggest brand winner from Netflix's 'Stranger Things' season 3. Here are the other brands that got a sizable boost.
- Inside Netflix's marketing strategy for 'Stranger Things,' the show that supercharged its work with brands like Lyft and Coca-Cola
- How Netflix and HBO are opening up marketing opportunities for their TV shows that usually only blockbuster movies get
- Netflix's 'Stranger Things' partnership with Baskin-Robbins started with a cold reach-out on LinkedIn that one exec thought was a joke
- How Netflix is using companies like Comcast and T-Mobile to drive its next phase of growth
- Molson Coors is making its beers ubiquitous on Netflix, Hulu, and Amazon. An exec explains its aggressive product-placement strategy.
- The Hulu exec leading product placement says its brand integrations rose 200% in the last year and explains how its strategy differs from rivals like Netflix
- How Disney's marketing advantage over Netflix will be its secret weapon in the streaming war
- Amazon's head of TV and movie marketing details the studio's turnaround effort under Jennifer Salke and its push to become more than a 'supermarket of content'