HOLLYWOOD, CA — As the search continues for ways to merge traditional and new-media markets, Hollywood is testing a number of ways to engage online viewers while extending advertisers’ marketing reach.Hulu.com, a joint venture of NBC Universal and Fox, debuted Wednesday. The service makes a large library of television shows, movies and other high-quality video available to online viewers who are willing to sit through two minutes of advertising during a half-hour episode. The service’s attraction, supposedly, is that it cuts ad time by 75-percent — but it doesn’t allow viewers to fast-forward through the commercials. It claims to have quadrupled the number of titles in its catalog and gained about 5 million loyal users since October, which may help it sway other studios — notably Warner Bros. and Lionsgate, with which it is in talks — to contribute content.
That’s good news for the market as a whole, eMarketer Senior Analyst David Hallerman told the Washington Post. It indicates users are interested in watching professional productions online, and professional productions are more likely to draw big, brand-name advertising dollars than amateur-based destinations like YouTube. Despite enviable traffic, to date none of the major social-networking sites, YouTube and MySpace included, has found a way to monetize the sometimes off-color content it offers.
“A trusted environment would draw more of this money,” Hallerman told the Post.
That evaluation was borne out by Jayant Kadambi, chief executive officer of YuMe, a Redwood, CA-based advertising network. YuMe pairs advertisers and video publishers, and its statistics indicate viewers’ tolerance for advertising is low when amateur video is involved.
“With user-generated content, people don’t want to see the ads,” he told the Post. “But if you’re desperate to watch something specific, you’ll put up with more ads to see it.”
But there’s more. According to Robert D’Asaro, U.S. director of digital strategic alliances at ad agency OMD, people who watch video content online sit closer to the screen and experience fewer distractions than those who watch television, making their exposure to ads more intimate and memorable. That’s part of the reason Nissan is advertising at Hulu, he said.
It doesn’t hurt that Hulu has adopted a strategy that is both targeted and minimal. Each segment is sponsored by one advertiser who gets the whole two-minutes of commercial time. The site also is experimenting with allowing viewers to choose which ads they want to see and with allowing content snippets to be embedded in blogs.
Other online video sites are beginning to get more creative and innovative with their advertising opportunities, as well. YouTube, for example, in August began superimposing 10-second, transparent ads at the bottom of some videos instead of enforcing 30 seconds of ad viewing before the video starts. Blinkx, a video-search site, embeds within videos ads that are keyword-relevant based on dialogue.
