News Corp.'s Hulu Hope: To Add More Commercials
Coming soon to Hulu: More ads?
As it negotiates its next contract with Hulu, News Corp. is pushing for the ability to run a greater number of ads in a portion of the Fox programs available on the site -- a shift for Hulu, which since its launch in 2007 has touted significantly lighter ad loads than what viewers get on TV. And a growing number of ads in Hulu could signal a shift for the wider online video world as well.
Under the terms being discussed, Fox hopes to add more commercials to the Hulu inventory it's already allowed to sell to its own ad clients, according to people familiar with the negotiations. The talks may not result in any concrete changes, and Fox would likely step gingerly into the effort, taking consumer and advertiser reaction into account, these people suggested.
The idea is for Fox to be able to sell advertisers the ability to hawk their wares across all platforms -- including Hulu.
To do so, it needs to get Hulu to agree to allow more ads, narrowing the gap between ad loads on Hulu and TV. The Hulu ad load, however, will likely not mirror the TV ad load.
The talks spotlight one of the most-fevered taffy pulls of the modern media age. Digital outlets covet network TV programs because they're often among the most-watched pieces of content. Yet letting those shows run online with a reduced ad load doesn't always make financial sense. Losing viewers to the web or a mobile device can mean a drop in TV ratings , still the largest driver of ad revenue for the TV business.
For Hulu, which has been in recent talks with all three of its media owners -- News Corp., Walt Disney and NBC Universal -- over a variety of issues related to access to programming, accommodating News Corp. could have a business effect. Hulu has stood out because of its ease of use and its sparse, streamlined design, of which the small ad load is no small part. Hulu in some cases even lets users choose the ad they'd prefer to see.
"Hulu and the networks are starting to step on each other's toes," said Michael Bologna, managing partner and director-emerging communications at WPP's Group M. While Hulu sells much of its own inventory, the networks are allowed to sell some as well. As Mr. Bologna understands the situation, Fox hopes to offer advertisers the opportunity to place ads on Hulu and Fox.com as a way to bolster their TV buy and reach a broader audience around such programs as "Family Guy" and "Fringe." Last year Fox did something similar with the slice of Hulu advertising under its control, using the Hulu stash to offer "make-goods," or ad inventory used to make up for TV-ratings shortfalls, to its advertisers. Such a move could easily undercut Hulu's own ad-sales efforts.
Fox offered brief detail about its venture at its recent upfront presentation, where Toby Byrne, the network's president-sales, said Fox planned "to extend the ability of your ads to travel with our content across screens to create a unified audience experience regardless of platform." Fox's ad-sales staff, he added, "will provide the one-stop shopping solution for your ads to run on-air as well as online with scale on Hulu. "
A Fox spokeswoman said Mr. Byrne was not available for further comment. A Hulu spokeswoman said the company would not comment.
Fox has reason to test these waters. The streaming-video site for the CW network, owned jointly by Time Warner and CBS Corp., last year upped its ad load close to matching the number of ads shown on TV. Despite the increase in ads, unique viewers of full episodes on CWTV.com increased 55% season to date as of May 19; the amount of time viewers spent watching online shows increased 175% this season; and 94% of the ads in full episodes streamed online were watched to completion.
More TV outlets could make this push as well. Nielsen has been preparing to measure ratings across TV and the web, as long as commercials shown online mirror those shown when a program aired on TV. That way, Nielsen can continue to provide so-called "commercial ratings ," which measure the average viewership of commercial breaks.