What Netflix’s approach to audience personalisation can teach SMEs about content strategy and demographic targeting 

What Netflix’s approach to audience personalisation can teach SMEs about content strategy and demographic targeting 

Polly Kay

Polly Kay
10th January 2019

Netflix is a subscription-based television streaming service that offers its users on-demand access to a vast library of films and TV shows, including original in-house productions that are not available elsewhere. For a set monthly fee, users of Netflix can access any of the platform’s TV shows and movies on demand whenever and wherever they want to, and build their own user profiles for themselves and family or friends to receive bespoke-tailored viewing recommendations.

Whilst the advent of online TV streaming might be a relatively new concept, Netflix has been around for longer than many people think; the company was founded in 1997, and began as a DVD rental and sales service operating by mail order. From these early origins, Netflix has grown and evolved into the world’s most popular television streaming service, with over 137 million subscribers worldwide.

Whilst the owner of the average SME will undoubtedly be at least peripherally aware of Netflix’s market dominance, being able to parse and understand how the lessons that Netflix has to teach brands about content strategy and demographic targeting can be scaled to apply to smaller operations in different niches is not always obvious.

However, there are a number of important lessons that Netflix can teach content marketers and businesses of all sizes about audience personalisation and content strategy that can help even the smallest of operations identify better prospects, reach more of them, and increase sales.

In this article I will talk about what Netflix’s approach to audience personalisation can teach SMEs about demographic targeting and content strategy, and provide some tips on how these insights can be applied across other industries.

How Netflix positioned itself as a leader in the online streaming subscription market

Netflix first entered the market back in the days when DVD and home video rental shops (like Blockbuster) could still be found on the average high street, and serving this market remotely with mail order DVD sales and rentals is how Netflix first began to win a share of the market.

During the early noughties, the average household didn’t have the bandwidth allowance or internet speed to enable online television streaming without frustration, but by 2005 Netflix has already floated the idea of a brand-new concept to futureproof their business in the face of declining interest in the mail order side of their operation.

Under the working title of “Netflix Box,” the concept was that users could download a movie overnight to watch the next day. However, 2005 also saw the launch and immediate rise to prominence of YouTube streaming, which quickly reached a position of market dominance despite the then-low video quality of its offerings.

Netflix’s plans for Netflix Box were ultimately shelved in 2007 as the popularity of and potential applications for YouTube began to become apparent, and Netflix began to develop the original on-demand TV and movie streaming service that we know today as a response to this.

This proved to be the right move at the right time, and from this point onwards, the DVD rental and sales side of the business went into decline, concurrently with their alternative online streaming service beginning to take off in a big way.

By 2010, Netflix was the largest source of internet streaming traffic in the evenings in North America, a position that it has maintained alongside of rapid expansion and growth across the world.

The addition of original content to the platform from 2011 onwards helped to secure Netflix’s reputation as the go-to video streaming service worldwide, and today, Netflix Originals are some of the most popular and most-watched types of content showcased within the platform.

Why audience insights and personalisation are the cornerstones of Netflix’s success

There is much more to the Netflix success than a simple knack for forward thinking and making the right moves at the right time – luck has nothing to do with it. Behind the scenes, Netflix’s market dominance is enabled and supported by audience insights and a high level of individual user personalisation that helps to ensure that people who subscribe to the platform keep coming back for more, and tell their friends as well.

Knowing what type of shows to make or purchase, how to raise awareness of them and get people to watch them and how to keep viewers viewing beyond the duration of the episode that they have selected all comes down to the audience insights Netflix develops for each user, and the effective personalisation of the content that they offer to them.

Netflix takes the personalisation of the content that it offers to each subscriber very seriously, and the brand serves as perhaps one of the best examples of effective audience personalisation that you can find.

When you subscribe to Netflix and begin to browse the platform you are immediately asked to choose certain shows and types of shows that you like, from which Netflix begins to build up an algorithm-based picture of your show preferences and viewing habits to use to recommend additional content to you, and to keep you viewing for longer periods of time.

The type of shows that you watch, those you abandon and those that keep you on the platform for hours are all factored into this, as are things such as when you tend to use the platform the most, and your preferred browsing devices.

More tangible user demographics such as age range and location are also integrated into Netflix’s audience insights and personalisation, but the real value for the brand as a whole comes from the analytics that Netflix collates from the real-life behaviours of the users of the platform itself.

How Netflix gathers information to collate viewer audience insights

The exact nature of the algorithm that Netflix uses to collate viewer information and build up audience insights is a closely guarded secret, but its effectiveness cannot be ignored. By reviewing the ways in which Netflix personalises the content that it offers to each individual viewer, it is possible to draw informed conclusions about the type of audience insights Netflix seeks and finds value in, and how they gather that data in the first place.

Data collated on people arriving on the platform itself (such as their geographic location based on IP tracking, and the personal information entered as part of a sign up) form the first part of Netflix’s knowledge of each user. The next stage involves navigating the viewer around a selection of popular shows and genres to enable them to give some input into the type of content they have enjoyed before and want to see in the future.

Virtually every click you make on Netflix functions as a datapoint for the brand itself – including additional people who you add to your subscription as viewers, shows you add to or remove from your watch list, show thumbnails that you open to view a synopsis of their content, and the type of searches that you perform too.

When it comes to actually watching videos, everything about your viewing styles and preferences are also fed into Netflix’s algorithm to fine-tune a complex picture of your viewing habits and preferred ways of using the site.

The times of day you tend to watch shows, the type of shows you watch, how many episodes you watch, whether you enable the option to auto-start the next episode and whether you pause shows and keep the window open whilst doing other things or navigate away all factor into it.

How Netflix applies and leverages their audience insights and their goals in doing so

First of all, Netflix offers a month’s free trial on the platform to encourage newcomers to take a risk-free punt on the service, and this month often provides all of the information Netflix needs to secure an ongoing subscription sign-up by using the insights developed during this time to personalise and incentivise the content offered to the viewer in the future.

Signing up is easy and the platform doesn’t make you fill out pages of personal information to attain your free trial, removing one of the first customer pain points or objections that often discourage prospects from continuing through a sales funnel and so, increasing the efficacy of the Netflix model.

Based on your basic profile information, Netflix with then seek to fine-tune their understanding of your viewing preferences by inviting you to bookmark shows and express an interest in different genres, and this, in turn, results in personalised recommendations that are tailored to appeal to you.

This takes the form of email marketing (for viewers who have opted into it), viewing recommendations on the site itself, account alerts for new shows you might enjoy or new seasons of shows you have previously watched, and the careful selection of the header video trailer that is prominently showcased at the top of your show selection page.

The information that Netflix collates allows them to incentivise longer viewing times, encourage you to view shows and films that gel with your interests and viewing patterns, and personalise the content that is shown to you to a high degree. If you have watched two or more shows or films featuring the same actor, the chances of Netflix recommending you more shows that also feature them increases too.

Even the thumbnails for each show that Netflix airs can vary from viewer to viewer, and exactly which thumbnail you see for any given show will depend on your known preferences.

As an example, if your Netflix viewing habits indicate a preference for dark humour and gritty realism, a TV show that involves both of these things as well as a romance storyline will tailor the thumbnails you are shown to appeal to your sensibilities. Another viewer whose viewing habits indicate a preference for romance may well see a different image and potted show description entirely, promoting the very same show.

Netflix relies heavily upon content marketing rather than brand-led promotions; which is why you may well see adverts posted across a wide range of different types of media for hugely popular Netflix shows like Orange is the New Black or Stranger Things, but you will rarely see promotional content for Netflix itself as a brand and a platform rather than its individual offerings.

The brand is also very active on social media, and has a large and loyal following across all of the main platforms. Netflix harnesses the power of social media to its full extent by interacting with its fans in a meaningful way, involving (or giving the impression of involving) fans and viewers in the company’s decisions, such as polling fans on which shows to reboot, add to their rotation, or invest in future seasons of.

The brand’s tone of voice is engaging, humorous and quick witted without being offensive or controversial, and this very carefully managed brand persona helps to ensure the cohesive nature of the brand’s voice and style, translating it across multiple platforms that viewers might use to find out more, or to make a decision on subscribing.

The Netflix name and model is so ubiquitous today that it speaks for itself; but even before this was the case, Netflix understood the power of their unique offerings and the value of highlighting them as their flagship USPs, in favour of trying to build loyalty to the brand itself.

That elusive, hard to achieve brand loyalty comes naturally when you’re the biggest fish in the sea, your content fulfils and exceeds expectations, and you can generate an organic buzz about what you do; all things that Netflix has proven itself capable of time and time again.

What Netflix’s approach to audience personalisation can teach SMEs about demographic targeting

It is not just how and where Netflix collates information on its viewer demographics to personalise its content that makes the platform so successful, but how they go about translating this information into workable terms that has ultimately secured their success.

This is something that SMEs can learn from and apply to their own brands, either by emulating the Netflix approach or by learning from it and catalysing the core principles of Netflix’s targeting and personalisation techniques to apply to a different niche and buyer demographic.

How to integrate demographic targeting into your content strategy: what SMEs can learn from Netflix’s approach

Here are a few of the things that SMEs can learn from Netflix’s approach to demographic targeting and audience personalisation.

Let your work speak for itself

As mentioned, Netflix relies heavily on content marketing rather than brand marketing, and letting your work speak for itself is one of the most powerful ways to build consumer loyalty and generate an organic buzz. Get this right, and a correlating uptick in brand perception will naturally follow.

This approach also enables Netflix to make the most effective use of social media to allow its fans and users to undertake a lot of the legwork involved in spreading the word about a new show, or getting people talking about a relaunched cult classic.

Be original

Netflix Originals make up a significant portion of the brand’s most-watched content, and the viewing preferences and viewer styles of the site’s users helps to not only increase viewing figures for its original content, but inform the development of future in-house productions too.

If you can offer something new, novel or original that provides you with a USP and that enables you to corner a specific market because you are the only company that offers it – and people want it – you will immediately gain an edge over the competition.

Remove pain points

Removing customer pain points is an important part of boosting sales and increasing customer loyalty, and this is something that Netflix achieves very successfully. A no-commitment free trial month incentivises that initial sign-up, which is easy to complete and not overly intrusive.

Because Netflix’s approach to collating data on new users’ viewing preferences and the shows they like is non-intrusive and offers value to the viewer themselves, Netflix is able to build up a detailed and comprehensive snapshot of the demographic targeting information that really counts. The type of shows people want to watch and how they want to watch them is much more important information for Netflix than where the viewer lives, or their age or race.

Innovate and offer more

The Netflix name is synonymous with innovation, and this is something that continues to drive brand growth and the expansion of the platform to an ever-wider audience of viewers.

An excellent example of how Netflix leverages demographic targeting to achieve better audience personalisation can be found in the brand’s partnership with the Three mobile network, in the form of Three’s “Go Binge” service. Go Binge permits persons who have a mobile wifi contract with Three to stream shows on Netflix (and a few other services such as Apple Music and Soundcloud too) without using any of their paid-for data allowance.

This partnership serves the dual purpose of removing one of the key pain points for viewers using mobile wifi devices or smartphones for streaming content without eating up their data allowance, whilst also raising awareness of the brand via the USP of a third-party partner company.

This ability to leverage demographic targeting insights and translate it into innovative solutions is what encourages viewers to sign up with Netflix in the first place, and to stick around when they do.

Look beyond the personal data

Effective demographic targeting starts and ends with knowing your audience, and being able to collate the type of data about them that you need to translate it into useful terms. Hard metrics such as age, gender and location always hold value, but it is the deeper dive that Netflix takes into the browser patterns and usage preferences of its site users that really pays off.

As well a building up a picture of your audience demographics based on their personal data, take a wider view of how people use your site, the pages they visit, the clicks they make, and what makes them leave. This can help you to enhance your content and promotions to account for the preferences of your different users, and this allows you to boost engagement and sales.

Highlight your USPs and make them work for you

One of the main things that viewers love about Netflix is the fact that most seasons of shows that become available on the platform are released in their entirety; you can watch a whole season straight through on the day it is released. This is one of Netflix’s most defining USPs, and a large part of the site’s appeal.

However, this approach has inherent value for Netflix itself too, because a viewer is exponentially more likely to go straight on to the second episode of a season that is available immediately than they are to remember it a week later (or whenever the next episode comes out) and recall it and be motivated to want to watch it enough to make a special effort to return to it.

Get your timings right

When Netflix drops a new season of a high-profile show or launches a brand-new Original series, they tend to do it on a Friday evening or over a weekend – such as the 2017 release of the second season of one of Netflix’s most popular shows, Stranger Things.

This is because viewers are more likely to have the time and inclination to sit down and binge-watch a show over a weekend than they are during the week, and insights such as these into demographic usage patterns and preferences hold value for even the smallest of businesses.

Seasonal tie-ins – again, that Stranger Things season was set around Halloween, and was released on 27th October 2017 (the last weekend of the month before Halloween) – can also provide additional opportunities to expand your reach and increase sales.

Know how to incentivise

Knowing what your customers and prospects want to see more of enables you to incentivise them more effectively, whether this be an incentive to watch an individual show or simply to remain on the viewing platform.

Netflix incentivises in a huge number of different ways, from its free initial month’s trial, partnership with Three on Go Binge, the presence of original content, and the sheer depth and range of the shows that can be found on the platform.

Offering something for everyone is a great way to build up a large and diverse user base, but you also have to know which incentives are relevant to which demographics, and highlight and showcase them accordingly.

Recommendations and insights

As I mentioned earlier on, Netflix relies heavily on individual viewer insights to tailor the type of shows recommended to each viewer in order to increase viewing times. Across the Netflix platform, this translates into everything from direct recommendations of shows you might like to the shows that are given prominence within your selection window to the type of thumbnails that are used to promote any given show to any given viewer.

This is something that you can emulate within your own website or promotional collateral; for instance, by making recommendations of alternative products or accessories for a certain product, slideshows of what’s selling fast or only remains in limited quantities, and what other people who were looking for the same things as the prospect ultimately went on to buy.

Removing objections

When you view a show on Netflix, the next episode in line is triggered to play automatically after a short countdown (unless you change your settings to stop this). If you can encourage a viewer to just watch the first few minutes of the next episode to resolve a cliff hanger or find out what happens next, the chances of them continuing to view the episode (and the one after it, for that matter) increases exponentially.

Additionally, the large header video trailer banner at the top of each viewer’s show selection home page is personalised to showcase the film or show that Netflix wishes to promote to the individual. For the platform’s most popular shows that have a highly universal appeal across a wide variety of demographics (such as Stranger Things) a prominent header position makes sense for many demographics, but for some audience members, a different choice is made to be more appropriate to their preferences.

Making a show that piques the interest or that generates a large social buzz easy to find without a prospect having to go looking for it increases the chances of a viewer checking it out, even if they only intend to give it a few minutes to see if it is any good.

Getting the viewer started on viewing a show is a large part of the struggle, and once they have begun to do so, keeping them there and extending their viewing times becomes much easier. Ergo, there is value in critically reviewing your own website and marketing collateral to negate objections and make life easier for your shoppers.

Personalisation, scalability and best practices for SMEs

If you’re running an SME and don’t have the resources of a monolith like Netflix behind you, knowing how to translate and scale down the Netflix approach to enhance your own online collateral isn’t always intuitive.

However, by learning from Netflix’s core principles of audience insights and personalisation, it is entirely possible to remodel them to suit your own enterprise and the approach you take. Here are the core takeaways to bear in mind.

Learn from your customers’ behaviour

Your existing and past customers are a rich and often underutilised resource for SMEs seeking to find new prospects, because the people who have already bought from you can provide a rich resource of information that can be used to target new groups in the future.

Dig deeper into what your customers do and how they do it as it pertains to what you sell – go beyond hard metrics like age and gender, and look for the patterns that can be found within the data you already hold. Information such as what customers choose for their second purchase, how long it takes them to return for more, the products that you offer that receive a lot of traffic but not sales and how long people stay on your site (and where and why they leave it) are all valuable.

Find out what your customers want

Netflix integrates a high level of interaction across their social media portals to get a feel for what their viewers want, from specific shows to types of content to brand new concepts. If you can open a dialogue with your prospects across any platform, use it, and work to gain insights that can help you to provide more of what people want from you, as well as learning how to demonstrate to them that you have it.

Follow the competition

Whilst other streaming services such as Amazon Prime Video and Hulu serve the same market as Netflix, the size and reach of even these key competitors have nothing on Netflix itself.

However, this doesn’t mean that Netflix ignores the potential threat of encroachment by these and other streaming services, and by watching the competition carefully, Netflix is able to predict and pre-empt their future moves and get ahead of them, as well as identifying areas for growth and pain points that discourage sign-ups.

This is something that every SME can and should be doing on an ongoing basis, and that is also apt to pay dividends regardless of the size of your operation.

In summary

By building up a comprehensive picture of your target demographics and fine-tuning the content that you offer to them to create a highly personalised, dynamic user experience that predicts the client’s needs and negates pain points, any SME can learn from the Netflix approach and apply their findings to their future content strategy to drive growth.

Examining how Netflix approaches innovation and responds to the needs of their viewers (often, even before those very viewers themselves know what they want) and applying these insights across other industries might seem ambitious, but such insights are also highly scalable, and relevant to virtually every niche and industry – regardless of its size.