[opendtv] News: Web Site's Formula for Success: TV Content With Fewer Ads
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Wed, 29 Oct 2008 08:37:07 -0400
http://www.nytimes.com/2008/10/29/business/media/29adco.html?_r=1&th&emc=th&oref=slogin
Web Site's Formula for Success: TV Content With Fewer Ads
By BRIAN STELTER
Published: October 28, 2008
"THUMBS up" and "thumbs down" ratings for commercials.
Choose-your-own-advertisement options before shows begin. Interactive
games during advertising breaks.
In the last year these online advertising innovations have been
popularized by Hulu, the online video Web site that will celebrate
its first anniversary on Wednesday. For all that has been written
about Hulu's easy-to-use, aesthetically pleasing interface, the
advertising experience is equally important.
In the place of the long commercial pods that TV viewers have become
accustomed to, only one ad is shown during each segment break on
Hulu. Fewer ads make the ones on the site more memorable, Hulu
executives say, allowing the site to charge higher prices for the ad
units.
"The notion that less is more is absolutely playing out on Hulu,"
Jason Kilar, the chief executive of the site, said. "This is
benefiting advertisers as much as it is benefiting users."
While Hulu was not the first site to serve up full-length television
shows or create new advertising units, it now dominates the emerging
market for ad-supported TV and movie streaming. It emerged in public
beta form one year ago with 10 advertisers, made its official debut
in March, and now counts more than 100 sponsors, from General Motors
to Old Spice.
The site has grown steadily, providing 142 million streams to 6.3
million unique viewers in September, Nielsen Online reported last
week. Hulu is now the sixth-most-popular online video brand in the
United States, surpassing the online video networks operated by ESPN,
CNN, MTV and Disney. (It ranks far below YouTube, which streams 20
times as many videos as any other brand in the United States, and
behind sites owned by Yahoo, Fox, MSN and Nickelodeon.)
With a library of more than 1,000 television series and 400
feature-length films, Hulu attracts a wider audience than individual
network Web sites or competitors like Veoh and Joost. Recently, the
site's biggest hurdle has been a shortage of advertising amid a
sudden increase in video viewing. The cause? "Tina Fey happened to do
an unbelievably good impression of Sarah Palin," Mr. Kilar said,
referring to the "Saturday Night Live" skits lampooning the
Republican vice presidential nominee.
Buzz about the sketches drove millions to view them online. The first
skit about Ms. Palin, on Sept. 13, was viewed 14.3 million times on
Hulu and NBC.com and watched by 10.2 million on television. The
second sketch, on Sept. 27, has been viewed 11.1 million times on the
site after being watched by 7.9 million on TV. While the comparisons
are inexact because online viewers could be watching more than once,
"Saturday Night Streamed" may seem a more apt title for the show.
At the same time that "Saturday Night Live" helped spike Hulu's
traffic, the fall premieres of many popular TV shows attracted more
visitors. To match the advertising inventory to the rapid growth in
video views, "we now have to go back out into the marketplace very
quickly," Mr. Kilar said.
While the site, a joint venture of NBC Universal and News
Corporation, is reportedly not yet profitable, it has won over many
advertising executives. "I've been waiting for this for 10 years,"
Greg Smith, the chief operating officer of Neo@Ogilvy, an interactive
agency of the Ogilvy Group, told Mr. Kilar during a product
demonstration last November.
Mr. Smith now uses the site regularly. "Hulu takes TV content, which
is the best long-form video content there is - the Web has yet to
come up with something as good - and it just breaks it out of the
tyranny of the schedule," he said in an interview.
In a customer survey commissioned by Hulu and conducted by Insight
Express in July and August, 76 percent of nearly 18,000 respondents
said that the site had the right amount of ads given the
can't-be-beat cost of viewing (free). Just over 17 percent said there
was less advertising than they expected. The survey also found a 22
percent bump in advertiser message association and a 28 percent
increase in intent to purchase among users.
Mr. Kilar is an advocate of the fewer-ads approach. The half-hour
comedies that are so popular on Hulu - "Family Guy" from Fox and "The
Office" from NBC - have an average of eight minutes of commercial
time on TV. On Hulu, where the sitcoms are especially popular, each
show averages about two minutes of ads.
"We think that a modest amount of advertising is the right thing
because that's going to drive atypical results for marketers," Mr.
Kilar said. He said the site had no plans to increase the advertising
load.
As effective as the ads may be, it must be hard to resist adding
more. ABC, a unit of the Walt Disney Company, conducted focus groups
with consumers last summer to gauge potential changes to the
advertising load on its video Web site. The company is now analyzing
the focus group findings, a spokeswoman said.
ABC.com was the first network Web site to introduce full-episode
streaming in 2006. Research by ABC last January found that the
one-ad-per-segment format resulted in a 54 percent ad recall rate.
ABC and the other broadcast networks now make the recent episodes of
almost every TV series available for streaming. NBC put the season
premieres of "30 Rock" and other shows online a week before they were
shown on TV this season.
Despite all the experimentation, it is still difficult to know
exactly how many viewers are watching individual TV shows and movies
online. Hulu ranks its most popular content, but unlike YouTube it
doesn't show the view count for each video. Still, it is clear that
millions of viewers are watching some shows online. The Season 3
premiere of "Heroes" in September was streamed 8.1 million times on
Hulu and NBC.com, according to the network. (All online streams are
not counted as equal, because on NBC.com each segment of an episode
is counted as a stream, so a full episode could count as six streams.
On Hulu, one episode equals one stream.)
It is easier to count the click-through rates for the video ads. On
ABC.com, nearly one in four users participate when the ads are
interactive, the network said. On Hulu, companies like Nissan have
offered multiple versions of commercials for viewers to choose. The
site is also experimenting with longer-form advertisements, sometimes
letting users choose to watch a movie trailer in place of a 30-second
spot.
Hiccups remain, Mr. Smith said, noting that technology sometimes
limits innovation. "I'm still getting the same spot five times in an
hourlong program sometimes," he said. "If I stop watching a movie and
come back a few days later, it remembers where I stopped, which is
great, but I wish it would remember which spots I was exposed to."
In a glimpse of the future of ad feedback, Hulu users are encouraged
to click buttons indicating whether they like or dislike each ad they
see. "As we collect more and more data, we can personalize the ad
experience for you," Mr. Kilar said.
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