Hulu: The Enjoyable Ad Experience

When you miss last week’s episode of Modern Family, you watch it on Hulu. When you want to see that funny clip from Miley Cyrus’ host appearance on Saturday Night Live, you can find it on Hulu.

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Hulu is an online video service that offers consumers a wide selection of television shows, clips, movies, trailers, and more; all legally and for free (for the most part). The site is clean, simple, and easy-to-use. Most of the popular TV shows are available for viewing on Hulu, which is ideal for busy people who don’t have time to watch a show when it airs. In today’s world, more and more people are watching television online as opposed to the traditional way… on a television.

Based on Anderson’s Taxonomy, there are two different strategies that Hulu uses as a free site. The first is the Advertising Model. Since the basic site is free and open to the public, Hulu makes its money featuring ads throughout the videos, like most online TV providers. However, Hulu stands apart from the rest. They say they have a ‘modest amount’ of advertising runs during normal commercial breaks, which is debatable. They offer 17 different ad units you can buy as an advertiser, with everything from a short content commercial, to an interactive ad player skin. Check out the short animated video on Hulu to learn more about the history of television marketing and advertising.

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As an avid Hulu watcher, I’ve seen a fair amount of Hulu advertising techniques, and I have to say that I am really impressed with their direction in it. What I love about the way Hulu advertises during videos is that it gives me the ability to customize my viewing experience. During each and every ad, there is a small text in the upper right hand corner that asks you, “Is this ad relevant to you?” You can choose ‘yes’ or ‘no’, which then prompts another text to show up, “Thanks! We’ll use your input to improve your ad experience”. I usually answer this question and I have seen a difference in the ads I receive. It’s nice to know that they care about my preference and what I would like to see, since I am being forced to watch ads anyway. Sometimes you also have the option to “Swap Ad” if you don’t like the one that is playing. They’ll usually play another one that’s about the same length as the original one, so you’re either cheating the system and getting less ad time overall, or more than what you originally had. Although, I’d rather enjoy the ads I’m watching, even if they are a little bit longer. My favorite ad experience on Hulu is when they give you a choice of three different ads to watch before the show starts. That way you can pick what you want to see, and you’ll probably be more inclined to pay attention since you got to choose it yourself. Sometimes they even let you choose to watch one long ad in the beginning of the show with no ad breaks in between the show. Hulu lets you be in control by giving you the ability to pick and choose what ads you want to watch, just as much as choosing what TV shows you want to watch. They understand why ads are annoying and want to make the experience as enjoyable as possible.Screen Shot 2013-10-30 at 10.33.57 PM

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Hulu also possesses the Freemium model, thanks to Hulu Plus. Hulu Plus is Hulu’s paid subscription service to users. For $7.99 a month, you can watch more content including full seasons of TV shows, all on three different screens: your computer, television, and mobile device. There is still limited advertising, but kids shows and movies are ad-free. Is that enough of an incentive for moms with short attention-span children? Hulu Plus advertising is everywhere when you’re on the regular Hulu site. They really try to get you to buy it, or at least try 1 week for free. Hulu Plus is usually tempting to get when you really want to watch a new episode of your favorite show, but you see the small green box with the h+ inside, telling you that you can’t watch it unless you have Hulu Plus.

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So, how effective are these two strategies to Hulu?

Based on Hulu Plus, according to reports, Hulu is estimated to be worth about $2 billion. They made $695 million in revenue last year with 4 million subscribers, paying $8 a month. Hulu Plus only holds about 10% of the video streaming market share, with it’s biggest competitor, Netflix, holding about 89%. While Netflix has more paying customers, Hulu holds an impressive 44% share of the popular TV market, with Netflix having 33% and Amazon having 7%. 38 million people have used Hulu at least once in the past year, and there have been 457 million video views during this time.

While the advertising model is annoying to users, it is understandable. Every streaming video on the Internet has ads, unless you are paying. Hulu does a great job of listening to the customer’s needs by making the ad experience the most enjoyable it can be. By giving them choice, they are already standing apart from the competition.

As for the Freemium model and Hulu Plus, I think it can be improved. Netflix is in the lead as far as market share and competition, and I think that is because they are a bigger name, they have more selection, and have virtually no ads. Having a Hulu Plus account does not necessarily block all ads for your viewing pleasure, contrary to what most premium accounts offer. If Hulu got rid of all ads to users with Hulu Plus, I think more people would subscribe and use it. I think being Freemium and having an option to pay more to have more is still a plus for Hulu, because it gives its users an option of how engaged with the product they want to be.

What’s your favorite ad you’ve seen on Hulu?

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