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Netflix’s global growth is a big factor in the company’s success. By 2017 it was operating in over 190 countries, and today close to 73 million of its some 130 million subscribers are outside the U.S. In the second quarter of 2018, its international streaming revenues exceeded domestic streaming revenues for the first time. This is a remarkable achievement for a company that was only in the U.S. before 2010, and in only 50 countries by 2015.
Other U.S. internet companies have scaled internationally, of course (Facebook and Google are two obvious examples). But Netflix’s globalization strategy, and many of the challenges it’s had to overcome, are unique. Netflix must secure content deals region by region, and sometimes country by country. It also must face a diverse set of national regulatory restrictions, such as those that limit what content can be made available in local markets. International subscribers, many of whom are not fluent in English, often prefer local-language programming. And many potential subscribers, accustomed to free content, remain hesitant to pay for streaming services at all.
Furthermore, strong competition in streaming already exists in many countries. In France and India, for example, homegrown leaders offer local-language video content, thus depriving Netflix of first-mover advantage. In some countries, like Germany and India, rivals such as Amazon Prime were already established. Yet the majority of Prime subscribers are in the U.S., and Netflix has managed to make inroads into even those markets where Prime arrived first. Now Netflix, with its global reach, has more subscribers worldwide than all other pure streaming services combined.
Netflix’s success can be attributed to two strategic moves — a three-stage expansion process into new markets and the ways it worked with those markets — which other companies looking to expand globally can use too.
Netflix did not try to enter all markets at once. Rather, it carefully selected its initial adjacent markets in terms of geography and psychic distance, or perceived differences between markets. For example, its earliest international expansion, in 2010, was to Canada, which is geographically close to and shares many similarities with the United States. Netflix was thus able to develop its internationalization capabilities in locations where the challenges of “foreignness” were less acute. In doing so, the company learned how to expand and enhance its core capabilities beyond its home market.
In that sense, the first phase of its globalization process was consistent with the traditional model of expansion. But from the experience and learning it gained in that process, Netflix developed the capabilities to expand into a diverse set of markets within a few years — the second phase of the process.
This second phase, involving a faster and more-extensive international expansion, saw Netflix extend its footprint to some 50 countries, drawing on the lessons it learned in the first phase in order to operate in a wider variety of markets. The choice of those markets was influenced by their degree of attractiveness, such as from shared similarities, the presence of affluent consumers, and the availability of broadband internet. The second phase helped Netflix continue learning about internationalization and partnering with local stakeholders while also growing its revenue. Since this phase involved expanding into more-distant markets, it was supported by investments in content geared toward the preferences of those geographies, as well as technological investments in big data and analytics.
The third phase, during which a much-accelerated pace of entry brought Netflix to 190 countries, used everything it had learned from the first two phases. It had gained expertise in the content people prefer, the marketing they respond to, and how the company needed to organize itself. Now Netflix focused on adding more languages (including for subtitles), optimizing its personalization algorithms for a global library of content, and expanding its support for a range of device, operation, and payment partnerships. Six months after entering Poland and Turkey in 2016, for example, Netflix added the local languages to its user interface, subtitles, and dubbing. As with the markets it had entered earlier, the company launched a service targeted at early adopters, and then iterated quickly to add features to attract a wider audience.
Recognizing that in some parts of the world, particularly emerging and developing economies, mobile is the primary way most people access the internet, Netflix also began placing a greater emphasis on improving its mobile experience, including sign-ups, credentials and authentication, the user interface, and streaming efficiency for cellular networks. It has been developing relationships with device makers, mobile and TV operators, and internet service providers as well.
Netflix has worked with, and responded to, the new markets it’s entered. The company has partnered with key local companies to forge win-win relationships. In some cases, it has joined with cell phone and cable operators to make its content available as part of their existing video-on-demand offerings. For example, when Vodafone launched a TV service for its customers in Ireland, it included a dedicated Netflix button on its remote controls. More recently, Netflix announced deals with Telefonica in Spain and Latin America and with KDDI in Japan.
And while Netflix believes that “great storytelling transcends borders,” in the words of Ted Sarandos, Netflix’s chief content officer, the company has responded to customer preferences for local content: Currently it’s producing original content in 17 different markets. Importantly, Netflix sees such content production as not just local-for-local, but also local-for-global. In other words, it aims to have content attract an audience not only locally, where it is produced, but also more widely. As such, Netflix potentially reaps the benefits of investing in local content all around the world.
To address the protracted process of signing content deals with major studios on a regional or local basis, it has increasingly pursued global licensing deals so that it can provide content across all of its markets at once. Netflix has also begun to source regionally produced content, providing a win-win for these producers, whose local content can find a global audience.
The company is also applying its deep customer insight to international markets, using that knowledge to create content that appeals to a wide range of customer segments. Despite its very rapid internationalization, Netflix implemented in all markets the same customer-centric model of operations that had been key to its success in the United States. It experiments with customer usage data to determine which offerings work best. Because it operates in so many countries, Netflix is able to try different approaches in different markets. As the number of its international subscribers grows, the performance of its predictive algorithms continues to improve.
Netflix has demonstrated that developing country-specific knowledge is critical for success in local markets. This knowledge needs to be both broad and deep, extending across political, institutional, regulatory, technical, cultural, customer, and competitor domains. Understanding local cultures ensured that Netflix could be sensitive to and respond to their differences. This enhanced its credibility and helped it forge smooth relationships with key stakeholders.
Taken together, the elements of Netflix’s expansion strategy constitute a new approach that I call exponential globalization. It’s a carefully orchestrated cycle of expansion, executed at increasing speed, to an increasing number of countries and customers. The approach has helped the company expand far more quickly than competitors. Going forward, Netflix will face increasing competition not only from other global players such as Amazon Prime but also from new entrants and regional or local players. In that regard, it will have to continue to expand its blending of global and regional content.
For a variety of market and technological factors, including the absence of high-speed broadband and a very low level of internet penetration in many parts of the world, exponential globalization was infeasible until a few years ago. With the growth of the internet in general, including on phones, tablets, and smart TVs, Netflix has demonstrated that this strategy is now a viable option. But it requires a mastery of local contexts, including the ability to acquire local knowledge and to demonstrate sensitivity and responsiveness. With the increasing prevalence of winner-take-all markets, companies operating in such markets will need to pursue an internationalization strategy similar to Netflix’s. And when it comes to Netflix’s next stage of growth, and how it will respond to new challengers, the sequel appears likely to be as captivating as the original.
Facebook Lookalike Audiences can help you find your new best customers. It’s a powerful tool for better Facebook ad targeting—drawing learnings about your most successful customers to find new people who are likely to be good customers, too.
Think of it as a sophisticated audience matchmaker for marketers. You tell Facebook what you like in a customer, and Facebook a delivers a new audience segment filled with prospects that meet your criteria.
Ready to find the audience of your dreams? Read on to learn how to create a Lookalike Audience for your Facebook ads, plus tips that will help you find the best match.
Bonus: Download a free guide that shows you how to save time and money on your Facebook ads. Find out how to reach the right customers, lower your cost-per-click, and more.
What are Facebook Lookalike Audiences?
Facebook Lookalike Audiences can be used to reach people who are similar to your current customers. They increase the probability of generating high-quality leads and offer more value on ad spend.
Lookalike Audiences are formed based on source audiences. You can create a source audience (also known as a seed audience) using data from:
- Customer Information. A newsletter subscription list or a customer file list. You can either upload a .txt or .csv file, or copy and paste your information.
- Website Visitors. To create a custom audience based on website visitors, you need to have Facebook pixel installed. With pixel, you create an audience of people who have visited your website, looked at a product page, completed a purchase, etc.
- App activity. With active Facebook SDK event tracking, app administrators can collect data on the people who have installed your app. There are 14 pre-defined events that can be tracked such as, “added to the basket” for retails apps, or “level achieved” for game apps.
- Engagement. An engagement audience is comprised of people who engaged with your content on Facebook or Instagram. Engagement events include: video, lead form, canvas and collection, Facebook page, Instagram business profile, and event.
- Offline activity. You can create a list of people who interacted with your business in person, by phone, or another offline channel.
Multiple Lookalike Audiences can be used at the same time for the same ad campaign. You can also pair Lookalike Audiences with other ad targeting parameters, such as age and gender or interests and behaviors.
How to use Facebook Lookalike Audiences
Step 1: From the Facebook Ads Manager, go to Audiences.
Step 2: Click Create audience and choose Lookalike Audience.
Step 3: Choose your source audience. Remember, this will be a custom audience you’ve created from customer information, Pixel or app data, or fans of your page.
Note: Your source audiences needs to contain at least 100 people from the same country.
Step 4: Select the countries or regions you would like to target. The countries you choose will determine where people in your Lookalike Audience are based, adding a geo-filter onto your Lookalike Audience.
Note: You don’t have to have anyone from the country you want to target in your source.
Step 5: Choose your desired audience size. Size is expressed on a scale of 1-10. Smaller numbers have high similarity and larger numbers have high reach. Facebook will provide you with an estimated reach for the size you choose.
Note: It can take between six and 24 hours for your Lookalike Audience to be finished, but you can still proceed to ad creation.
Step 6: Create your ad. Go to the Adverts Manager and click Tools, then Audiences, to see if your Lookalike Audience is ready. If it is, select it and click Create Advert.
Feel like you’ve got a handle on Lookalike Audiences? The video below goes into even more detail.
9 tips for using Facebook Lookalike Audiences
Find the right source audience and use these tips to reach new people on Facebook.
1. Use the right source audience for your goals
Different custom audiences match different goals.
For example, if your goal is to drive awareness of your business, a Lookalike Audience based on your Page Fans may be a good idea.
If your goal is to increase online sales, then a Lookalike Audience based on website visitors will be a better choice.
2. Get creative with Custom Audiences
You can create custom audiences around a variety of parameters. Drill down on the options that best align with your campaign goals.
Ideas for Custom Audiences include:
- Video audience. If you’re launching a video-based campaign, create an audience based on people who have engaged with your videos in the past.
- Recent website visitors. All website visitors may be too broad of a list, especially if conversions are your objective. Target people who have visited your website in the past 30 days, or visitors who have put something in their cart.
- Email audience. Newsletter subscribers are interested in receiving news and deals about your business. Use this audience to get more subscribers, or if you’re planning a campaign with similar content.
3. Test your Lookalike Audience size
Consider different audience sizes for different campaign goals.
Smaller audiences (1-5 on the scale) will most closely match your custom audience, whereas large audiences (6-10 on the scale) will increase your potential reach, but decrease the level of similarity with your custom audience. If you’re optimizing for similarity, aim for a smaller audience. For reach, go large.
4. Choose high-quality data
The better the data you provide, the better the results.
Facebook recommends between 1,000 and 50,000 people. But an audience of 500 loyal customers with always perform better than an audience of 50,000 good, bad, and average customers.
Avoid broad audiences like “all website visitors” or “all app installers.” These large audiences will include great customers along with those who bounce after a short time.
Hone in on the metrics that determine your best customers. Often these are further down the conversion or engagement funnel.
5. Keep your audience list up-to-date
If you’re providing your own customer information, make sure it’s as current as possible. If you’re creating a custom audience with Facebook data, add date range parameters.
For example, if you’re adding a custom audience based on website visitors, you may only want to target those who have visited your website in the last 30 to 90 days.
Lookalike audiences update dynamically every three to seven days, so anyone new who visits will be added to your Lookalike Audience.
6. Use Lookalike Audiences in combination with other features
Enhance your lookalike audience targeting by adding more targeting parameters such as age, gender, or interests.
To launch its home theatre speaker, PLAYBASE, Sonos developed a multi-tier campaign that used Lookalike Audiences in combination with video ads, link ads, and Facebook dynamic ads. Phase one of the campaign targeted existing customers and new ones based on their interests, and phase two retargeted video viewers and Lookalike Audiences based on phase one engagements.
The one-two punch campaign delivered 19 times the return on ad spend.
Bonus: Download a free guide that shows you how to save time and money on your Facebook ads. Find out how to reach the right customers, lower your cost-per-click, and more.
Get the free guide right now!Make sure to take full advantage of the hyper-targeting capabilities of Lookalike Audiences with high quality ads. Read our full guide to Facebook ad formats and best practices.
7. Optimize bids with a set of Lookalike Audiences
Use your most effective audience to segment Lookalike Audiences into non-overlapping tiers.
To do this, click Advanced Options when selecting your audience size. You can create up to 500 Lookalike Audiences from just one source audience.
For example, you could segment an audience based on the most similar, second most similar, and least similar lookalikes, and bid accordingly on each.
8. Pinpoint the right locations
Lookalike Audiences are a great way to target expansion in new global markets.
Most often marketers know where they’re looking for new acquisitions. If global domination is your aim (or you’re not sure where to focus), consider creating a Lookalike Audience in app store countries or emerging markets.
Facebook will always prioritize similarity over location. That means your Lookalike Audience may not be evenly distributed between your locations.
Sunglasses retailer 9FIVE wanted to extend their US campaign to Canada and Australia, so it created an international Lookalike Audiences based on current customers in both countries. Ads were also segmented per region and targeted with unique dynamic ads. They lowered cost per acquisition by 40 percent, and achieved 3.8 times the return on ad spend.
9. Try the Customer Lifetime Value Option
If your business involves customer transactions and engagements that take place over a longer period of time, consider creating a customer lifetime value (LTV) custom audience. But even if not, Value-based Lookalike Audiences can help separate your big spenders from the not-so-big spenders since they factor in consumer CRM data.
To optimize for its The Walking Dead: No Man’s Land release, Next Games created a standard Lookalike Audience of paying app users and a value-based Lookalike Audience. By comparison, the value-based audience delivered a 30 percent higher return on ad spend.
“We saw a measured uplift in performance when comparing value-based Lookalike Audiences with standard Lookalike Audiences built using identical seed audiences and would recommend testing value-based Lookalike Audiences,” said Next Games CMO, Saara Bergström.
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