In his keynote interview at New Bay’s Advanced Advertising conference yesterday, I was impressed with how Hulu’s SVP of Ad Sales Peter Naylor continually said that viewers are now in charge and have vastly higher expectations of their TV experiences. Nothing could be truer in the online video era and by putting viewers first, Hulu has hit on a winning formula.
One great example of Hulu being viewer-first is how it provides subscribers with the choice of “Limited Commercials” for $7.99/mo or “No Commercials” for $11.99/mo. Naylor reiterated what Hulu has said many times before, that the majority take the ad-supported plan, which on the surface seems incongruous given Netflix’s and Amazon’s success with ad-free services.
But Naylor noted Hulu’s research shows that just 7% of people are hard-core ad avoiders; the remainder are somewhere along a spectrum of ad sensitivity. So for this 93%, Hulu immediately scores points simply because prospects are provided a choice of plans. And note, for those that self-selected into the less expensive ad-supported plan, their willingness to do so will certainly affect their attitude and openness toward commercial messages.
Although the subscriber chose the ad-supported route, Naylor cautioned that the “viewer must be respected” and so that means they get an ad load that’s 50% of the typical broadcast/cable experience. Because Hulu has registration and viewer data and all of its ads are fully addressable, it can deliver better targeting and value for advertisers. It’s exactly what NBCUniversal, Turner and others are hoping to do as they pursue plans to reduce ad loads.
Putting the viewer first, and also delivering high-quality programs such as the Emmy-winning “The Handmaid’s Tale” has helped drive Hulu’s median age to 31 years-old, down from 33 in the past 2 years. With 78% of its viewership on connected TVs, Naylor said Hulu gives advertisers a valuable option for reaching younger viewers with TV ads on the big screen.
It’s also worth noting that Hulu recognizes that the future of TV is blend of live and on-demand. Naylor said that half of the viewership of its new Live service is actually on-demand and that sports, award shows, news and big reveal reality shows are the only non on-demand strongholds, no surprise.
With its awkward ownership group including Comcast, Disney and Fox and the uncertainty the Sky deal has injected, Hulu’s future is as murky as it has ever been. However, Hulu seems to have figured out a winning formula by putting the viewer first in a subscription model that retains the value of TV advertising, enhanced with better targeting and interactive potential. All of that make Hulu an extremely valuable asset going forward.