Netflix Is Spending More on Marketing This Year Than Some of Its Rivals Are on Content

Streaming service now has 130 million subscribers and a $2 billion budget for campaigns

Netflix recently assembled 47 of its African-American creators and actors to recreate the historic 1958 photo, “A Great Day in Harlem.” Kwaku Alston/Netflix
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As if its $8 billion original content budget isn’t already daunting enough for its competitors to match, Netflix is outspending its rivals in another key area: marketing.

In its Q2 letter to shareholders Monday, the streaming service revealed that it has already spent $1 billion on marketing in the first six months of this year (almost doubling its year-over-year marketing spend), putting it on track to top $2 billion in marketing spend for 2018.

The $2 billion in marketing expenses, which the company told shareholders in January it had budgeted for this year, is bigger than the annual content budgets for several of its rivals, including Apple, Facebook and AMC Networks.

In the past month alone, Netflix has launched several attention-grabbing campaigns. In June, the company assembled 47 of its African-American actors and creators—including Spike Lee, Ava DuVernay, Lena Waithe and Laverne Cox—to recreate the historic 1958 photo “A Great Day in Harlem.”

Jerry Seinfeld channeled Volkswagen’s classic “Think Small” campaign, with help from his friend Matthew Broderick, to tout the new season of Comedians in Cars Getting Coffee. On Monday, Netflix released a fake, ’80s-themed mall spot to tease Season 3 of Stranger Things.

And the company’s lavish For Your Consideration Emmy campaign paid off last week as Netflix ended HBO’s 17-year streak as the network with the most Emmy nominations, nabbing 112 in total, ahead of HBO’s 108.

Earlier this year, Netflix dropped a surprise Super Bowl ad for a Cloverfield sequel, The Cloverfield Paradox, which it began streaming immediately after the game.

Those marketing expenses will continue throughout the rest of the year. After offering $300 million in April to buy the Los Angeles-based billboard company Regency Outdoor Advertising, Netflix has decided to buy only half of Regency’s assets for $150 million, according to Reuters.

Netflix already significantly outspends its rivals on original content; the company expects to shell out as much as $8 billion this year.

Apple and Facebook, which have been relatively late to the original video content game, are starting more modestly. Last August, Apple had earmarked $1 billion on content over the next year, according to The Wall Street Journal, while a month later, Facebook had also set aside $1 billion for original shows on its platform.

Those numbers are in line with the $1 billion AMC Networks and Scripps Networks Interactive spent on original and acquired non-sports programming in 2017, according to data from MoffettNathanson. (And that’s just half of Netflix’s marketing budget for 2018.)

Netflix’s streaming rival Amazon had a $4.5 billion budget last year, according to MoffettNathanson, while Hulu spent $2.5 billion.

Of the more traditional media companies, NBCUniversal spent an estimated $10.2 billion on non-sports content in 2017, followed by Fox and Time Warner ($8 billion), Disney ($7.8 billion), Viacom ($5.4 billion), CBS ($4.2 billion) and Discovery ($2.2 billion).

Those companies will likely have to increase their content—and marketing—budgets if they want to keep pace with Netflix.

In its earnings release yesterday, Netflix said it added 5.1 million subscribers during the second quarter, which was 1 million less than its subscriber growth projections. The company said in a letter to shareholders that its second-quarter performance was “strong but not stellar.”

Netflix now has 130 million subscribers worldwide, 57.4 million of which are in the U.S.

@jasonlynch Jason Lynch is TV Editor at Adweek, overseeing trends, technology, personalities and programming across broadcast, cable and streaming video.