A hallmark of Netflix is its complete lack of advertisements in the traditional sense — the service is supported entirely by paid subscribers, and there are no tiers that include interruptive ads. Last September, CEO Reed Hastings told Variety, “It’s definitely not a rule. It’s a judgement call…It’s a belief we can build a better business, a more valuable business.” That means avoiding commercial breaks and other explicit forms of advertising that might interfere with viewers’ enjoyment of the movies and shows they signed up for, a decision that has endured despite Netflix’s immense debt, which added up to some $16 billion since 2011.
Yet it’s working: last month Netflix announced that it expects to be cash-flow positive after 2021 and will no longer have to borrow to support its expensive content production and acquisition plans. But while brands are seen on Netflix shows, no ad money actually trades hands with Netflix itself.
From Coca-Cola and Kellogg’s Eggo waffles both releasing branded products through deals with Netflix’s sci-fi series “Stranger Things” to Subway’s “Say It With A Sub” campaign referencing its role in the on-screen adaptation of “To All The Boys I Loved Before,” seamless brand integration enables cross-promotional marketing in a mutually supportive fashion — An act of you scratch my back and I’ll scratch yours.
In terms of product placement, Hollywood Branded’s CEO Stacy Jones, who has worked on brand deals with multiple Netflix shows, including Lacoste and Queer Eye, BlackBerry and House of Cards, Ralph Lauren, and Elite, among dozens of others, told Content Commerce Insider, “The cash from these transactions [between production and brands] is typically not pocketed by someone, it is instead re-invested in the film or series to make that content better.” It’s similar to how many productions in China operate, with brands serving as underwriters.
An over-the-top brand presence is strong on one of Netflix’s most recent hits. “Bling Empire” — a reality show version of “Crazy Rich Asians” — is brimming with luxury namedrops and product close-ups. The majority of the cast members are of Chinese descent, and, though not officially available in the country, the show has drawn attention from viewers based in China, which is set to become the world’s largest market for luxury by 2025.