Branding Fundamentals & Netflix: Know Your Business, Know Your Brand

Many people think about branding (and marketing) as an exercise in creating the illusion that your customer sees. (And for many companies, that's about as deep as their brand goes...) I take a different view. I believe that branding is NOT about logos and taglines, etc. Branding, in my opinion, IS about corporate self-awareness - about knowing who your company is and why it matters. And to achieve that, the brand must be relevant and meaningful to both the customer AND the people who work at (and run) the company. Because if you and your people don't know your company, how can your company possibly hope to have its people deliver anything of value to your customers? And one critical aspect of knowing your company (Brand) is knowing, and accepting, what business your business is in. And I thought I’d share an example of how that works using Netflix and their original content.

What business is Netflix in... what is their Brand?

Critics of Netflix’s original content keep asking for, and being denied access to, the actual viewing numbers for original shows. The conspiracy theory goes like this - House of Cards and Arrested Development and all the other original shows must not actually be successful because Netflix won’t tell us how many people watched the episodes.

The Brand Math of a Broadcaster

Broadcasters show content
-Popular content (a hit) = more viewers
-More viewers = higher ad rates
-Higher ad rates = better bottom-line

-Popular content (a hit) = better bottom-line
Makes sense, right? When you’re in the broadcasting business, you need a hit show. The more hit shows you have, the more money you make. This is the business of broadcasting.

Is Netflix a Broadcaster?

Not based upon this formula. Netflix makes the same amount of money from its subscribers whether they stream one show per month or one hundred, whether they watch the most popular show or the least popular one. And this just isn’t my opinion. Remember how Netflix’s stock plunged after Starz, in a dispute over license fees, cut Netflix off from premium content several years earlier? Pundits predicted that the loss of “premium content” meant the end of Netflix. It clearly didn’t. Netflix has added more than 7 million new subscribers since then. Why?

The Brand Math of Netflix

Netflix shows content
-More content = more viewers
-More viewers = more stability
-More stability = better bottom-line


-More content = better bottom-line

That’s a really different financial paradigm, isn’t it? Whereas broadcasters are in the business of developing popular content to get better ad rates to achieve a better bottom-line, Netflix is in the business of showing content to improve stability to achieve a better bottom-line. Which is a long way of illustrating why, for Netflix, the number of views a show gets is irrelevant. What matters is whether those shows are delivering value to the business it’s actually in.

Successful Brands knows who they are and why they matter

And that’s why I think Netflix and their original content strategy is such a great example of Brand. Because yes, of course, brand is what you sell. But, more importantly, it is about having a deep and fundamental understanding of why your business matters to your customers – and what you need to be successful delivering that - and then executing. And I would argue that when it comes to knowing your business… Netflix does.

Agree? Disagree? Drop me a line and let me know!