The internet has arguably been the most exciting new development for advertisers in the past 50 years, but that doesn’t mean that online advertising is without its problems.
Arguably, one of the biggest problems is a misalignment of the interests of media buyers and media sellers, with the latter often not appearing to care much about the value the former receives.
But some digital media sellers are making an effort to be more fair with the advertisers who pay the bills. Case in point: Hulu.
As reported by AdAge’s Michael Learmonth, the online video powerhouse, which pulled in more than $400m in revenue last year, is moving the ad beacons that count video ad views to the end of videos to ensure that its advertisers are only charged for ads that have been viewed in their entirety.
The change, which also affects ads shown through the Hulu Plus subscription service, is not surprisingly something Hulu advertisers have been pushing for. Obviously, no advertiser wants to pay for an ad not seen, but many have no choice but to.
So why did Hulu agree to what is arguably a more equitable arrangement with advertisers when demand for its ad inventory is so high? The answer: it was able to.
As AdAge’s Learmonth notes, Hulu’s ad completion rate is 96% — a stunningly high number in the online video space. There are a number of reasons for this. For instance, Hulu doesn’t let users skip pre-roll ads and the nature of long-form content gives users less of an incentive to skip an ad. That makes Hulu an attractive advertising platform for brands, which don’t just get warm fuzzy feelings from knowing that their ads have been viewed in their entirety. According to John Nitti of Zenith Optimedia, “Vendors with greater video completion rates [see] greater brand lift and greater message recall.”
The fact that just 4% of ads are not viewed to completion means that Hulu can afford to give advertisers a better deal. In other words, Hulu executives can still sleep comfortably at night without charging for ads-not-viewed. Hulu is not going to lose much money with this move, and it will probably make more money in the long run because it’s helping to ensure that advertisers see high value in the ads it displays.
Contrast this with Facebook, which is increasingly looking to monetize in the run-up to its IPO. The social network’s moves may bolster its bottom line in the short term, but they put advertisers in a position where they’re increasingly paying more for less.
Whether Hulu-like moves become more commonplace remains to be seen, but it does offer a strong reminder to publishers: if you’re confident in the ads you’re selling, taking action to prove it isn’t all that difficult. Abused advertisers should take note of that.