Despite its annual revenue rising by 24 percent, online streaming platform Netflix has cut back on advertising expenses by 23 percent in 2020. The cutback includes ‘digital and television advertising’ by $432 million to $1.45 billion in 2020.
The decision to reduce advertising expense points towards Netflix’s health as streaming rose exponentially during the pandemic. The streaming of original shows such as ‘Bridgerton’, ‘The Crown’, and ‘The Queen’s Gambit’ paid off and the company added over 37 million subscribers last year to cross 200 million.
Netflix’s total marketing costs, including advertising, have however slipped as a percentage of total revenue from 15 percent in 2018 to 13 percent in 2019 and 9 percent in 2020.
According to the company’s annual report, “We utilize a broad mix of marketing and public relations programs, including social media sites, to promote our service and content to existing and potential new members. We may limit or discontinue use or support of certain marketing sources or activities if advertising rates increase or if we become concerned that members or potential members deem certain marketing platforms or practices intrusive or damaging to our brand.”