Monday, July 6, 2009

Advertising Costs More on Hulu Than on TV!

Note: This entry was made on June 27th and scheduled for release. Unfortunately, technical issues prevented that and I did not realize it until earlier.

Once a Nielsen poll showed that online advertisements were generally more memorable than those on TV, the rates for ads on Hulu skyrocketed. Right now, it costs $30-40 per thousand to advertise during a TV episode of the Simpsons; it costs $60 per thousand to advertise during The Simpsons on Hulu.

Some note that Hulu only shows commercials at three points during a 30-minute show: the beginning, the middle, and the end. Hulu also tends to show the same commercial each time. Perhaps this explains why the ads are easier to remember? Another theory is that people are "already in front of their PCs" when they see the Hulu ads, and so are more willing to research the product(s)/service(s) advertised.

Whatever the case may be, basically everyone agrees that Hulu will lose its "cool" status, and its traffic, if it starts serving commercials the way TV does. There are three commercial breaks during a 30-minute show on Hulu, which is about 1:30 minutes; there are nine, full minutes of commercial placement in your average 30-minute show on TV! Most commenters noted that once the sites such as Hulu.com and TV.com go in that direction, they will stop viewing the sites.

Another factor is that TV shows seen online play specifically to audiences which have sought them out. If someone is watching a TV show or movie online, they are a guaranteed viewer; a fan watching online intentionally sought-out that content and is actively watching it. Online viewing delivers the show's precise target audience (and advertisers'). Traditional TV viewers often skip commercial blocks by visiting the restroom, grabbing a snack, or performing some other quick task. Yet another reason online viewers are more likely to recall ads seen there.

However, this revenue has yet to compensate for the revenue lost by networks as viewers make the switch to the Web. TV viewership saw an overall decline of nearly 4% last year. Even as large corporations make the move to online advertising, TV networks are still feeling the pinch. While online ad rates are higher, the sheer number of ads shown on TV still bring in more money - a lot more money - and networks know this all too well. While Web advertising is beginning to matter more and more, shows - and thus advertisers - still reach a larger audience on TV. Further, these ad rates apply only to premium content; advertisers will not pay the same amount for shows which perform at less than Simpsons levels.

While still in its infancy, online, entertainment-based advertising is finally starting to be accepted by the mainstream advertising community. While a complex and changing tapestry is emerging, the fact remains that online advertising works.

© C Harris Lynn, 2009


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