Netflix switches its position on demographics

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At this year’s SXSW festival, Netflix took a bold stance on defining the value of traditional demographics in guiding marketing strategy. After several years of testing and learning, Netflix has determined this user demographic data (age, gender, geography) is “almost useless”. 

Todd Yellin, VP/Product Innovation went so far as to call big data “a mountain of excrement. With little pieces of gold buried in there.” He also poked some holes in the tried and true practice of seeking consumer input via surveys and ratings.  “Explicitly telling us what you like…doesn’t work.  People pretend.”

Netflix isn’t completely dismissing customer feedback or demographic targeting. But they have reset their priorities into a hierarchy of data points to optimize their marketing strategy. Yes, it includes a demographic layer.  But it relies more heavily on testing, monitoring what subscribers do, and understanding why they did it. 

These opinions aren’t groundbreaking to DRTV marketers. We have lived by a different set of rules for decades. Our campaigns have always been optimized based on actions taken.  How many consumers picked up the phone to request information? How many went online to place an order? And what did it cost for each of these actions?

Netflix has a wealth of data based on what subscribers view. And they answer the “why” by talking with their consumers regularly.  These conversations are purposely indirect, however. Structured carefully to provide more truthful answers.  Instead of “What do you think of our new user interface” they’ll ask “was it easy to find something great to watch?”

DRTV response provides a great platform for answering the “why” as well. And sophisticated DRTV advertisers use various data points to optimize the full campaign.  The call center script provides an opportunity to glean information about the effectiveness of the commercial message. Tracking branded and non-branded search will yield key insight into how consumers talk about your product. And online behavior taken in response to your ad can answer questions about where you stand among your competition. 

When you think about it, Netflix’s claim isn’t so bold after all. What is a better indicator of a consumer’s likelihood to purchase your product… who they are, or what they do? 

Ask yourself, are you relying too heavily on database segmentation or a third party consumer profile to identify and communicate to consumer prospects?  Are there opportunities to leverage existing consumer touch points to use behavior-based data as a means to optimize your marketing strategy?

In today’s world of increasing TV fragmentation, hitting the right consumer with the right message is becoming more difficult.  Applying the practices of DRTV, and taking a cue from Netflix, could keep your marketing platform from becoming a House of Cards.