Netflix VP: word of mouth is the best marketing tool

Netflix has experienced a tumultuous year of price hikes, stock drops and one million customers waving goodbye, but the company remains the top instant video streaming service for a reason. According to Corporate Communications VP Steve Swasey, it's all about the advertising.

Swasey touted Netflix's road to success in a recent Yahoo! Futurist video, outlining the company's humble beginnings as a by-mail DVD rental service and its eventual expansion to online streaming.

"Before Netflix, the only way to rent a movie was to drive to the video store - which was inconvenient, where there was crummy selection, lousy service and punitive late fees. Netflix changed all that," said Swasey. "It is a behavior-changing company."

Ironically, Netflix itself evoked similar complaints this year.

User interface tweaks over the summer made in the name of improvement were poorly received by many subscribers. Customers likewise cringed at a 60 percent price hike and major content providers cutting support. The company's execs, namely CEO Reed Hastings, drew fire from critics over the decision to create a new company to handle Netflix's by-mail rental service. Qwikster was quickly killed off, but left a DVD-sized blotch on the company's reputation.

Swasey touted Netflix's "clever, catchy and memorable" web, radio and TV spots as vital to its success, but claimed unpaid advertising is priceless.

"The best marketing for Netflix continues to be word-of-mouth," he said, adding that Netflix spends around $200 million each year on traditional targeted ads.

Swasey also defended Netflix's efforts to please customers, saying that the company spends "a considerable amount of time" listening to focus groups held at both its Los Gatos HQ and across the country.

"Any company is destined to fail if they don't listen to their customers or prospective customers," he said. "If they think they have the answer and don't test it with the public, they're going to fail." (via Yahoo)

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