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Hulu Puts Some Skin in the Game — and Plays Catch-up to TV

in Media Planning & Buying with tags , , Both comments and trackbacks are closed.

In a video landscape twist, Hulu has made a move whereby its buying model will now more closely resemble that of TV. The platform announced this week that it will now only charge advertisers for video ad views that reach 100 percent completion rate. This is all tied to where the beacon resides on the ad – previously, it was fired at the initial ad play, and now it fires at the end of it. The change impacts both free and subscription (Hulu Plus) offerings.

Hulu ad unit for the Mini Roadster

The significance of this move is twofold:

1. Digital is setting itself up to play in the broadcast sandbox. Digital video companies are taking big leaps to structure their packages in a way that appeals to the broader landscape of “video” buyers. Hulu, and many others, are putting some serious skin in the game. This not only relates to their shift in a more buyer-friendly pricing model, but also in the expansion of content.

On Monday, the New York Times reported on Hulu’s plans to increase investment in original programming – content that will be pitched to the ad community today as part of the Digital Content NewFronts kick-off event in New York (see more coverage over on Adweek). Over the course of 13 days, in the closest resemblance to the broadcast upfronts that we as an industry have experienced to date, the leading powerhouses in the digital content space will showcase their programming line ups. The themes we should expect to see as the digital space tries to compete with its TV counterparts are an emphasis on content, quality and scalability.

2. We still have a long way to go towards standardization. The inconsistencies behind video pricing models and counting methodologies and the slow adoption of commonsense practices (standardized ad players, leveraging the interactivity of digital via ad choice features or charging only for completed ad views, to name a few) pinpoint a hurdle that is yet to be crossed. Google’s TrueView – announced as a test format on YouTube in late 2010 but only recently made official – adopted some of Hulu’s ad features by incorporating viewer choice into the ad experience. However, it also announced a unique “skip-ability” feature (user is permitted to skip an ad, after viewing for five seconds).

Updates like these shift power to the consumer – which might translate to higher receptivity to online advertising as a whole – but they also introduce more variation. If we truly are to compete with traditional TV environments for big budget ad dollars, it behooves all marketers work towards common formats, definitions and counting methods – the first step in an apples to apples comparison to the GRP. The collaborative spirit of the NewFronts is a sign of more unified digital industry that is approaching maturity.

While Hulu’s move to charge advertisers only for fully viewed ads signifies a step in the right direction, it feels somewhat overdue. The concept of a “makegood” has long existed in the TV world as a way to remedy situations where spots are disrupted or delivered incompletely. The creators of Hulu were the biggest powerhouses in the TV space when they launched the service, so it seems logical that this practice of charging for only completed views would carry forward into their digital venture. This is a critical adjustment that right-sets and, in a small but notable way, catches them up to TV.

As the industry strives to improve the way we buy video in ALL formats, the most positive outcome will occur by combining the strengths each channel has to offer.

So, what can TV bring to digital? The highly standardized nature of TV ad formats, counting methodologies and buying models (perhaps to a fault). Marketers should aspire to apply some of this sanity to the chaos of the digital space in a way that doesn’t stifle innovation or box them into antiquated practices and ratings systems.

And what can digital bring to TV? The flexibility, interactivity, trackability and more dynamic buying models associated with digital video ad formats. How can we break down the walls that exist amongst stakeholders in the TV ad space so that marketers can restore faith that the $64.8 billion that is projected to flow into this space in 2012 is truly driving value?

To be fair, there are some profoundly innovative technologies and execution platforms entering the broadcast realm – such as internet-enabled “ConnectedTV” or addressable TV via Set Top Box data – but the bulk of that billion dollar ad industry is still being monetized in traditional methods. It will take time before radical change is pervasive, but Hulu’s move is an indicator of the type of progress online video needs.

According to comScore, Hulu posted yet another record-breaking month for video ad views in March at 1.7 billion. Hulu also delivered the highest duration and frequency of video ads out of ten video ad properties surveyed.