Netflix shows and movies are full of brands — but is it product placement?

• Netflix is ad-free and says it doesn't do paid product promotions — so why are brand names featured so prominently in Netflix shows and movies?
• Netflix is, in fact, doing product placement; it just doesn't let brands buy their way into appearing in Netflix titles.
• Even if no money exchanges hands between Netflix and the brands it features, it's a smart business move for the streaming platform to promote brands in its content — which may be why Netflix originals are filled with logos and products.
• With series like "Stranger Things" and films like "To All the Boys I've Loved Before," Netflix is finding new ways to partner with big names like Coca-Cola and Subway through marketing tie-tins and merchandising deals.
• Netflix has been careful to distance itself from the paid model of product placement, likely to protect its ad-free image.

Following is a transcript of the video.

Narrator: Netflix says it doesn't let brands pay for product placement. So how do you explain this?

JJ: You guys see that? That's the Malibu 24 MXZ, the world's finest Wakesetter. No. 1 in luxury, quality, and performance.

Narrator: Or this?

Antoni: Stores like this, they're designed for the Bobby Camps of the world, OK? It's all organized in a very logical, structured way.

Narrator: Or this?

Steve: It's finger-lickin' good.

Narrator: All of those scenes are from Netflix originals, and they all feature branded products in a way that feels a lot like advertising. So if Netflix says these aren't paid promotions, how are all these brands winding up in your favorite Netflix shows?

Clip: Refreshment you can trust. A bottle of ice-cold Coca-Cola when you're thirsty.

Lucas: Sweeter. Bolder. Better.

Narrator: Product placement is nothing new, and in the streaming era, the practice can take a lot of different forms.

Lenny: Because first, I have to drink my Cherry Coke Zero.

Narrator: Some Netflix competitors, like Hulu, have openly pursued a variety of product-placement deals. Amazon has ventured into shoppable product placements for Prime Video, and Disney Plus is reportedly open to securing product-placement deals for its upcoming original shows. So what about the world's biggest streaming service?

Whenever Netflix has commented on the brand presence in its original series, the company has said that it generally doesn't take cash from brands in exchange for showing their products on screen. That's the old pay-to-play model of product placement, where brands simply buy screen time. And in today's industry, it's just one of many ways for brands to land their products in a show or movie. Most of Netflix's statements, though, refer to only this narrow definition of paid product placement and don't really address whether the company is working with brands in other ways behind the scenes of Netflix productions. That may be because Netflix wants to protect its ad-free image.

Dominic Artzrouni: I think it's because Netflix really wants to avoid that label of them selling out in any way.

Narrator: This is Dominic Artzrouni, and he's the founder of Concave, a market-research firm that tracks brands' placements in entertainment.

Artzrouni: Product placement, in most people's mind, is highly associated with paid advertising, being invasive, selling out.

Narrator: Despite Netflix's efforts to resist the product-placement label, one 2018 study found that Netflix originals have more product placement on average than non-Netflix originals. And Netflix has a lot to gain from showcasing brands in its content, whether or not those brands actually pay for the opportunity. Take the wildly popular Netflix original movie 2018's "To All the Boys I've Loved Before."

Chris: We can't have these contraband Subway cups out in the open. PS, that sub is tight, right?

Narrator: There's no mention of Subway sandwiches in the novel this movie's based on. But Netflix's rom-com made Subway into a defining feature of Lara Jean's best friend, Chris, who loves the chain's sandwiches so much that she texts in Subway-branded emojis. Subway is known to push for a speaking role for its products in TV shows.

Kamekona: But this Subway sandwich? So ono.

Steve: How many of these did you order?

Kamekona: Five.

Kono: Five foot-longs?

Kamekona: It was a good deal.

Narrator: And Netflix clearly granted it that in "To All the Boys." Business Insider reported that a third of Chris' screen time involved Subway in some way, and the brand was weaved into the very plotline of the movie. At one point, Chris is craving Subway so badly that she ditches their usual lunch in the cafeteria, leaving Lara Jean to eat with her crush.

Netflix got something in return for this when the "To All the Boys" sequel rolled around in 2020. The movie again featured aggressive Subway marketing in its prop design and dialogue.

Lara Jean: Why are we in woodshop for our Valentine Subway tradition?

Narrator: And Subway in turn launched a special campaign to promote the film through its own marketing channels.

Given that millions of people eat Subway every day, that's some valuable publicity for Netflix. This type of deal is called co-promotional marketing, and it basically means that the two companies trade promotions. Netflix gave Subway cultural relevance in "To All the Boys," and Subway helped Netflix attract more subscribers who want to watch this movie.

Clearly, it's a smart business move for Netflix to embed brands in its programming, even in cases where the product placement seems to happen organically, like it did with Eggos in "Stranger Things." Eggo said it was as surprised as anyone else by its waffles' big role in the show's first season, but after seeing an unexpected boost in sales, the brand decided to partner with Netflix and play up its "Stranger Things" moment.

The two companies inked a deal for a series of cross promotions, including a joint Super Bowl ad spot that used a throwback Eggo commercial to tease the second season of "Stranger Things." Eggo, meanwhile, continued to appear throughout seasons two and three of the show, a win-win for both companies.

Plus, after featuring a brand in one of its shows, Netflix has a pretext to team up with that company on all kinds of product tie-ins. Judging from the long line of product launches around "Stranger Things," Netflix is fully leaning into this kind of merchandising now. And the show's been a perfect vehicle for this strategy, thanks to all the opportunities for '80s nostalgia marketing.

Netflix has linked up with brands to make "Stranger Things" waffle boxes, several models of bikes, and a whole slate of clothing and sneaker lines. Characters even promote some of the product lines in their costumes, with Dustin, Eleven, and Jim Hopper wearing pieces from Netflix's clothing collabs in several pivotal scenes from season three.

Calvin: That's a lot of color for you, chief.

Hopper: Its cutting-edge stuff. All right?

Narrator: Iconic characters on the show become inextricably linked to certain products, just like we saw with Chris and Subway in "To All the Boys I've Loved Before." In that way, Netflix seems to be following the example of franchises like James Bond, a case study of great, character-based product placement.

Artzrouni: The Eggo waffles become like a staple of Eleven, and no one sees any of that as forced product placement because it comes intertwined with the character. The perfect example of this is James Bond. Aston Martin has been with James Bond since the beginning.

Narrator: In 2019, Dominic's firm, Concave, released a report finding that over 100 brands appeared in the third season of "Stranger Things" in total, giving those brands an estimated $15 million in ad value within just three days after the season's release. As of June 2020, Concave estimated that number has gone up to $55 million. And the biggest winner was Coca-Cola. Concave found that the company's drinks, vending machines, and signage helped make it the most visible brand in season three.

Its presence peaked in the finale, when Lucas interrupts all the action to give a big, long speech on the merits of New Coke, the flavor that launched and flopped back in 1985.

Lucas: It's like Carpenter's "The Thing." The original is the classic, no question about it. But the remake?

[slurps]

[sighs]

[smacks lips]

Sweeter. Bolder. Better.

Narrator: This moment felt a lot like a commercial.

Clip: You mean you don't drink Coca-Cola Classic? Us kids like Coke. It's light, smooth. It's the latest.

Narrator: And in a way, it was. Right on time, Coca-Cola brought back New Coke as a special re-release with Netflix. Scenes like this make the brand presence on Netflix all but impossible to ignore. Yet, when Netflix saw Concave's report on all the brands in season three, Netflix's team reached out to Dominic to push back on the use of one term.

Artzrouni: They hated the use of the term "product placement."

Narrator: Netflix said that it didn't accept payment for any of the placements in "Stranger Things."

Artzrouni: They claim that product placement, you should only call it that when money is exchanging hands. And that's a total misunderstanding of product placement.

Narrator: It's true that co-promotional deals, like those with Coca-Cola or Eggo, don't require an exchange of money between Netflix and the brands it features. But as we saw in the Coke scene, just because a brand appearance wasn't paid for doesn't mean it'll be any lighter on the commercialism.

Artzrouni: You can argue over who's doing the placing. Is it the company, or is it the producer? But at the end of the day, we make no distinction, because the viewer doesn't know. It doesn't really matter how the brand got there.

Narrator: Scripted brand cameos, like all the Subway references in "To All the Boys," might make you wonder: How did the brand get there? And how much of a say do they get in the writing? To answer this question, we went to Branded Entertainment Network, or BEN, a company that specializes in setting up product-placement deals and that's gotten brands into a bunch of Netflix originals.

Erin Schmidt: So, we take what the brand is trying to accomplish, and we go and talk to content creators. In some cases, we get to read the script. And if those content creators are interested in that brand, believe in what the brand is trying to accomplish within their piece of content, we can continue that conversation.

The producer or the content creator really guides the creative from there. It's very easily not going to work for a brand if it just doesn't fit into the storyline organically.

Narrator: So, if producers, not brands, are running the show, why do we still get moments like this?

Pope: 2020 mode with 24 MXZ. World's finest Wakesetter. No. 1 in quality, luxury, and performance.

Narrator: Well, the producers themselves might be getting money or free stuff from brands. And since many of the biggest Netflix originals aren't actually produced at Netflix, the streaming company can keep some careful distance from all of this, as it'll be the production studio, not Netflix itself, interfacing with brands and agencies like BEN.

In fact, a lot of the Netflix shows that BEN has placed products in have been produced outside Netflix, like "Fuller House," where they landed Jose Cuervo; "Jessica Jones," where they got Tincup Whiskey; or "House of Cards," where they got regular appearances for Dunkin' Donuts and General Motors.

In titles like these that are produced out of house, Netflix will sometimes get a say in whether brands make their way into the script. But if there are money or contracts involved, Netflix can pretty much stay out of it, while quietly letting their producers take fees or free products and services from brands.

That happened with the 2018 movie "Like Father," another Netflix original produced out of house. Royal Caribbean gave the film crew free use of one of its cruise liners. In other words, a free filming location for most of the scenes in the movie. The producers modified the script to include details specific to the cruise liner and the activities offered on board, even adding a whole game-show scene that wasn't in the script before.

This kind of assistance from brands in return for product placement can help producers save big and stay under budget. And it's good for Netflix too.

Schmidt: For every platform, you want to empower your producers. Allowing a producer to strike deals or to do trade out with expensive opportunities, whether it be a location or an auto or all of those things, you're empowering that producer to do that extra shoot, to do that really cool chase scene or whatever it might be to move that piece of content to the next level.

Narrator: On the one hand, these types of behind-the-scenes arrangements can result in pretty heavy-handed brand messaging on screen. But on the flip side, it can sometimes feel more intrusive when shows avoid product placement altogether.

Artzrouni: The thing I find actually more unnerving than product placement is when you see shows where they've removed the badges off cars, or they've taped up the back of computers, or, you know, if you have, like, blank cans of soda. That's not realistic.

Narrator: Netflix's use of product placement is a trade-off for viewers. The kind of deep brand integration you see in Netflix originals is less disruptive than commercials, and it might help Netflix stay ad-free while continuing to churn out high-quality content. But when brands become stars in their own right, it sometimes blurs the line between what's an ad and what isn't.