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Thanks to shows like "The Simpsons" and "CSI," Hulu is finally charging more for ads online than during primetime.
According to June Sanford C. Bernstein & Co. report, Hulu is charging almost double the rates FOX gets for the Simpsons online. Fewer ads served during the program means that these shows are still making less money online, but the higher rates are indicative that when audiences move online, advertising will move with them.
Marketers typically pay $20 to $40 per thousand viewers for a prime-time ad. But according to the Sanford C. Bernstein report, "The Simpsons" cost $60 per thousand viewers.
According to Bloomberg:
"Marketers, who are now considering commitments for the 2009-2010 TV season, are willing to pay more because TV.com and Hulu.com, owned by investors including News Corp., NBC and Walt Disney Co., provide committed viewers who actively seek out shows. There are fewer commercials, and consumers are twice as likely to recall Web ads."
That's good news for a site like Hulu — unless they start charging for content. News Corp. has been threatening to charge for access to Hulu, but fees could stunt Hulu's audience growth. And the advertising rates for the site's shows.
As it stands, the primetime audience shrank 3.6 percent last season. But the online audience for premium video content is still too small to replace television ads.
If websites start charging for content that consumers are accustomed to watching for free on television, they may not be able to get the audience numbers necessary to charge premium rates.
But large advertisers are shifting their ad budgets online. From Bloomberg:
"Intel Corp., the world’s largest semiconductor manufacturer, has shifted spending to sites including Hulu as part of a $100 million worldwide marketing campaign, according to Arlene Villanueva, global media director for the Santa Clara, California-based company."
General Motors is also sending its brand building dollars online.
But online ads aren't nearly ready to replace primetime. Sanford C. Bernstein predicts that ad sales at the four networks will drop 10 percent this year to $12.8 billion.
And the online component still has an earnings flaw. There aren't as many ads shown during online videos.
As a result, even ads that are earning premium dollars aren't making as much money for companies. A "Simpsons" episode on Hulu has 37 seconds of ads, compared to the nine minutes of ads that air during a half hour of network programming.
But getting large brands to spend more for viewers online than on television proves that if and when audiences move to these sites, advertisers will come with them.