NEW YORK — Hulu put on a star-studded presentation at the IAB's Digital Content NewFronts Wednesday, bringing out celebrities like Margot Robbie, George Clooney and Chrissy Teigen to hawk a slate of original programming that ranged from magical-realist comedies to a new food-focused vertical in partnership with Vox's Eater. Of potentially greater interest to brands and agencies in attendance was how the platform, which now boasts more than 28 million U.S. customers across its various subscription tiers, plans to monetize that content in a streaming space that grows increasingly crowded with ad-free services.
"Viewer behavior has changed, but we know that advertising hasn't quite kept pace. We're leading a charge on what we call 'viewer-first' advertising," Peter Naylor, the company's head of advertising sales, told a packed crowd at the Hulu Theater in Madison Square Garden. "That means we're creating new ad solutions that are relevant and seamlessly integrated into the viewer experience."
Breaking up the presentation's extensive content teases, which included a look at the resurrected "Veronica Mars," two new Marvel series and an adaptation of Nick Hornby's "High Fidelity," Hulu touted a number of innovations to better flesh out what "viewer-first" advertising might look like. Featured at the NewFronts show were "pause ads" that only play when the user decides to take a break, which the company first piloted earlier this year with Coca-Cola and Charmin and plans to roll out broadly in August; a new format specifically catered to binge-watching habits that will debut in Q4; and an initiative called "Friends with Benefits" that looks to add an interactive layer to timely promotions served on Hulu.
While many of these products are still in an experimental phase, Hulu made it clear on Wednesday that such offerings will become an integral, if not defining, part of its growth strategy, especially as the demands for data-driven and addressable TV continue to climb. These innovations also signal that the service will try to stay on the leading edge of the streaming space, even as the company becomes majority-owned by Disney and could rub up against the media giant's Disney+ platform, which will be an add-on option for Hulu when it launches later this year.
"[O]ur goal over the next three years is that half of Hulu's ad revenue will be from nondisruptive and nontraditional formats," Naylor said. "The center of gravity for viewers has shifted."
Binge-ready ads
Hulu's slew of NewFronts ad products that broke with the traditional TV commercial mold in some ways reflected the meteoric growth that advanced and connected TV have recently experienced — a trend that has bolstered Hulu's business, which is differentiated from many digital competitors, like Netflix, in offering both ad-supported and ad-free subscription models.
"In the past year alone, we've seen the number of advertisers buying Hulu via our advanced TV offering grow by nine-fold," Naylor said.
Beyond leaning into more digitally oriented formats, Hulu positioned measurement and audience makeup as competitive advantages against the networks and pay TV rivals. Regarding the former, executives claimed that Hulu's attribution tool — a purported first for streaming that was tested with direct-to-consumer brands like Zulily and Away — resulted in a nearly 20% lift in overall purchases for its partners.
On the latter front, the median age of a Hulu viewer is now 31 years, per Naylor, which is 20 years younger than estimates for the median age of traditional broadcast and cable viewers. With that younger, more tech-savvy base comes different consumption habits as well.
Millennials, in particular, over-index on binge watching, Jaya Kolhatkar, who joined Hulu as its first chief data officer last year, said during the presentation. That same segment is proving more difficult for TV advertisers to reach, as 30 million people under the age of 35 have cut the cord entirely. To account for this gap and capitalize on the uptick in binging, Hulu announced plans to roll out a new format called binge ads in Q4. The ads monitor for binge-watching patterns and reward viewers who participate in them on a situational basis.
"This new product will allow us to tailor a brand's message to that viewing behavior," Naylor said. "This could be anything from watching the next episode commercial-free to a personalized offer from your brand."
Focusing on experience
Hulu hedging more of its bets on forward-thinking ad formats carries risks, however. Only 25% of surveyed consumers who have noticed ads while streaming content believe that streaming channels offer the highest quality advertising, while 41% said traditional TV still does, according to OpenX data shared with Marketing Dive. To account for concerns like ad fatigue, which can affect perceptions of ad quality, Hulu at the NewFronts reinforced its recent commitments to keep ad pods capped at 90 seconds and limit creative assets to running four times a day per viewer.
"This provides a consistent experience to the viewer and allows us to refine our ad deliver with sophistication," Nayer said.
Other ideas demoed at the NewFronts indicated how interactive streaming content will continue to be a point of industry conversation and might represent a more radical break from the standard means of advertising than something like pause or binge ads. The Friends with Benefits concept, for example, focuses on following users' curiosity and surprising them through what appears at first to be new content.
One of these Easter Egg-like concepts featured a fake movie called "Happy Blues," a facsimile of a rom-com that, when clicked on to be viewed, unlocks a free denim shopping spree from Old Navy. Kelly Campbell, CMO of Hulu, positioned the idea as having strong potential around similar events, like Mother's Day, where a flower brand could use the tactic to provide deals on bouquets.
"This is about reimagining the way Hulu customers connect and interact with some of their favorite shows and movies,' Campell said. "You can think of these as moments ... to create a more immersive, fan-driven experience."
