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Hulu's 'less is more' approach to advertising pays dividends

As other programmers move toward decreasing ad loads, Hulu LLC has been racking up gains across varied metrics by proffering content in an environment that enhances the viewer experience with fewer commercials and more relevant messaging, one of the streamer's ad executives said.

Speaking at the Advanced Advertising conference in New York on March 26, Peter Naylor, senior vice president of ad sales at Hulu, said that with the proliferation of various streaming services and video-on-demand options, programmers have to present a more enticing environment for modern-day viewers.

"You can't just jam in ads. Consumers can just easily move over to ad-free experiences. We want to keep them in the ad-supported environment. It's good for our business, good for our business partners, good for Americans and capitalists," he said, eliciting laughter from the crowded room.

Utilizing 90-second ad pods and some six minutes of advertising per hour overall, Naylor said "we're already at 50% of the ad load" compared with general broadcast and cable ratios.

Hulu now counts some 37 million viewers, a total that continues to build, while the median age of its watcher declined to 31 from 33 two years ago, he said.

Citing Nielsen data, Naylor said the measurement company describes 80% of its audience as light TV viewers. "They're younger and hard to reach with conventional media. [Hulu] makes for a nice complement to traditional TV schedules."

In addition to adding subscribers, Naylor said engagement levels are surging and the platform's ad sales are growing overall.

He said Hulu's personalization capabilities and its use of various data enable it to serve up campaigns that reach the right household, eliminating advertising waste. He pointed to a recent scheduled ad aimed at cat lovers that over-delivered by 20%, compared with the untargeted part of the campaign.

Naylor also discussed a recent interactive promotion it conducted with Fandango in which a trailer was served up for Warner Bros. "Tomb Raider"; the viewer could then use the remote control to enable a ticket purchase for the theatrical. Asked if the effort moved a lot of ticket sales, he said that would be a "generous" characterization. However, he believes that purchase activity will increase as consumers' expectations are reset and they become more accustomed to such interactivity.

The executive also teased Hulu's upfront presentation, which will be held at the Hulu Theater at Madison Square Garden. The streaming service acquired the naming rights to the venue in February. "We'll do what you would expect in terms of rolling out our originals and some celebrities," he said. There will also be mentions of the opportunities around the growing percentage of Hulu viewing being transmitted through connected TV devices, as well as details on its targeting and data capabilities.

As to upfront selling season, Naylor said it will trade on scarcity, "the finite amount of good stuff. We're talking to all the major agency holding companies."

More coverage of the Advanced Advertising conference:

TV ad targeting platform to play big role in upfront pitches