Hulu is an online video service that offers a whole world of shows to viewers who are rapidly shifting away from traditional cable television. That’s just one of the reasons the fast-growing service represents a serious opportunity for advertisers to reach their audiences. The company’s offerings have expanded dramatically in the past few years, from two content partners in 2007 to more than 500 in 2013—including the six major networks. As Hulu has expanded its library, it has also ventured into original programming, currently producing four original, exclusive series—all renewed for second seasons, no less.

The service offers customers two types of subscriptions, Hulu and HuluPlus. Hulu is a free service, 100% supported by advertisers, and offers more limited programming. HuluPlus also runs ads, but requires a paid subscription that provides viewers with a larger library of programs—from full seasons to extra episodes of shows found on the free, basic version. According to Hulu company data, the service has about 25 million unique users each month. HuluPlus alone has 5 million subscribers. Hulu is considered the leader in premium online video, owning 25 percent of all premium online video ad supply, according to comScore. The service delivers 28 percent more videos per month than the six major broadcast networks combined, comScore reports.

That’s a lot of viewers. Why are they switching, and what’s in it for advertisers? Let’s take a closer look.
An appealing medium for evolving TV viewers.

According to eMarketer, adults now spend more hours watching digital media each day than they do watching traditional TV. And TDG Research reports that 63 percent of U.S. broadband households own a TV connected to the Internet. Hulu’s service tracks with the radical shift in viewing habits among consumers in recent years. It offers people the freedom to watch their favorite programs on demand, which can also mean advertisers have the full attention of a more engaged audience who chooses the most convenient time to sit back and relax to watch their shows. It also provides viewers with the flexibility to watch programs on many different devices—from TV sets and laptops to tablets and smartphones.

A promising channel for advertisers.

When you buy time on Hulu, you know your messages will be delivered to the audience, because the service makes it impossible for viewers to skip ads. For further reassurance, the company also has a policy of only billing the advertiser when an ad has been viewed from start to finish. The tradeoff that grabs viewers: Far fewer ads run on Hulu than on traditional television, making it an appealing alternative.

Hulu also guarantees advertisers that their ads will be kept a safe distance from competitors, so their message carries more uniqueness. Nice touch. What’s more, the service enables advertisers to fine-tune their target audience, all the way down to zip code.

The cost and the potential return.

Of course, another advantage of running a spot on Hulu is that viewers are often in a position to respond to it immediately by clicking through to your landing page. The typical click-through-rate is 0.3%, the company says (although they don’t guarantee that rate, because there’s no way to control how many ad views happen on non-clickable devices such as televisions). Also noteworthy: Hulu requires a minimum spend of $25,000 for its advertisers, which could be cost prohibitive to some media budgets.

The bottom line

The rapidly changing media landscape spells big opportunity for advertisers when it comes to a platform like Hulu. More and more households are making the transition from cable TV to Internet-based programming. Adding Hulu to a traditional media mix can generate more impressions—and help advertisers target their audience more specifically. And with the service’s required ad watching and start-to-finish viewing guarantee, this outlet could represent money well spent for organizations looking to “change channels” at the same pace as their audience.

Kelly Kilpatrick
Kelly Kilpatrick

Associate Media Director
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