Thursday, April 01, 2010

Hulu’s Third Choice – Door Number 3

It seems that the experts have spoken and if Hulu is going to survive, it has only two choices going forward.

Either Hulu must become a paid service, which the network backers want.

Or, it must stay ad-supported, which the media agencies would like as it offers them a great test bed for new targeted ad formats that can’t be skipped.

This latter choice would require more ads being run than the six per hour currently running on Hulu.

That’s it. Hulu can choose door number one or door number two.

My question is, whatever happened to door number three? And if there were to be one, what could possibly be behind that door that isn’t behind the other two?

Hulu currently charges about a $40 CPM. The viewers have no control over how long they view the commercial for. Advertisers think that this form of forced engagement sells product.

In my opinion, when a viewer is forced to watch a commercial it’s not so much engagement as it is entrapment.

Yes, it is certainly a forced exposure. But exposure to and engagement in a commercial are two very different things. Everyone knows that but no one wants to admit it.

Advertisers already know how to pay for exposures. What they’re clamoring for is a way to pay for engagement. Unfortunately, true engagement can only be measured by giving the viewer complete control over how long they’re engaged in a commercial for.

Engagment is a measurement of intent. The viewer's intent. Not the advertiser's.

Forced views eliminate the intent of the viewer. A forced view just measures the intent of the advertiser.

By eliminating forced views, in other words, by giving the viewers control over how long they watch a commercial for, Hulu could start to sell data that actually measures viewer intent, i.e. engagement.

What’s more, because advertisers are not restricted to thirty-second spots on Hulu, two-minute spots are possible; longer form commercials could actually be created to build engagement.

But the real news behind door number three is that the engagement data that advertisers are clamoring for doesn’t replace exposures or CPM. Reach is still a viable and important metric. Engagement data is something that advertisers will pay in addition to what they already pay for exposures.

Which simply means that it’s an additional fee to Hulu.

Why? Because engagement, measured as time spent viewing the commercial, is a creative issue, not a media issue.

In the future, advertisers will pay their media agencies for exposures and their creative agencies for engagement.

Both will be held accountable through data. Data that Hulu owns.

And that’s truly what’s behind door number three.

The future.

No wonder no one is offering it up as an option.

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