Hulu is one of the most popular video sites on the Internet, second only to YouTube. Still, the site has difficultly maintaining itself and generating money for its important TV network partners, so the debate rages right now whether to charge for some of its content.
“[Hulu] does have to move to a premium model,” said one network exec to Ad Age. “If you look at the business, it’s just not economically feasible to give away programming at low rates.”
Currently, Hulu has banners in the $40 CPM range, of which half are sold out and 70 percent is paid back to networks, giving Hulu just enough money to serve videos. Of course, they also receive 30 percent of inventory sold directly by networks, along with other deals with individual networks.
“There’s room for an ad-supported model for TV online,” said Curt Hecht, president of Publicis innovations unit Vivaki. “Hulu is a great environment with great programming; the onus is on us to help figure out the business model.”
With networks fighting for compensation from cable networks, Hulu is by itself in the purely ad supported TV category. Still, the company could run more ads-per-hour and get active feedback on what consumers want for their ads. “It definitely gets you closer to the answer than just throwing up more ads with no targeting involved,” said Tracey Sheppach, innovations director at Vivaki.