Advertising Week

Advertising Week: Leaders From Hulu, AOL and MLB Advanced on Where OTT Is Headed

A Conversation About Cord Cutters, Laser-Targeting and Shifting Audiences

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There's no crystal ball to reveal the future of OTT and D2C, but an Advertising Week panel with representatives from Hulu, AOL and MLB Advanced Media made some compelling predictions.

The panel, "Direct-to-Consumer: OTT and the Future of Video Entertainment," focused on ad targeting, shifting audiences and consumer attitudes about commercials, along with topics like content creation and discoverability.

When discussing the shift from cable subscriptions to OTT content, Hulu's Senior VP-Ad Sales Peter Naylor said there have been a lot of cord cutters and cord shavers using his company's service. "We know a lot of people have multiple subscriptions, so it's just a rising part of the ecosystem and a rising part of consumer behavior." Mr. Naylor added that Hulu started with an entirely desktop experience, but that now the service sees over 62% of its content consumed in the living room, its fastest growing segment of the viewership.

On the topic of serving ads to digital consumers, both Frank Besteiro, AOL's VP-business development and partnerships for video, and Mr. Naylor were optimistic. Mr. Naylor mentioned Hulu's new limited-commercial and commercial-free plans and research the company did on attitudes toward commercials. "We found that, it's really about the attitude, not income, gender or age," Mr. Naylor said. "And what we've found is most of the people signing up are still signing up for the ad-free plan. There are ad acceptors and ad avoiders, and a whole spectrum in between." Only 7% of people are adamant ad avoiders, he added, and if you use data-informed targeting to serve people a more relevant ad, they're more accepting of it.

The panel host, Chris Vollmer, partner at Strategy&, mentioned Reed Hastings' prediction that all TV will be digital in 15 years. Mr. Besteiro said he thinks personalization will figure into digital video much more, and Mr. Naylor said he thinks people will assemble their own mini bundles based on interests. "There's so many vertical OTT offerings that I don't think it's unreasonable to think people will create their own mini bundles," Mr. Naylor said.

From an advertising perspective, said Mr. Besteiro, there's much more value in the digital world, which can serve relevant ads to a relevant audience. "On the linear [traditional cable] side, I'm shooting a cannon hoping it hits something," Mr. Besteiro said of ad targeting. "On the digital side, I can now shoot laser shots, sniper shots, and get exactly what I want to reach. That's much more effective."

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