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As Madison Avenue Rushes to TV, Hulu Works For Its Cut of the Action


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Hulu is owned by TV companies – and now it’s working to try to capture some of TV’s ad dollars before it’s too late.


The streaming-video hub has been offering lower rates of increase to advertisers willing to commit more dollars than in the past to its business, according to four people familiar with recent negotiations. The offer has come as Madison Avenue rushes to put dollars down on broadcast primetime TV as part of the industry’s annual “upfront’ sales market. Hulu declined to make executives available for comment.


Hulu is controlled by Walt Disney and owned by both Disney and Comcast. Its willingness to drop the rates it charges to reach 1,000 viewers – a measure known as a CPM that is central to all discussions between TV networks and advertisers – takes place in the midst of a surprising return of emphasis by marketers on traditional TV.


With viewers migrating to streaming video, TV advertisers need to spend more to reach the same level of audience they did in years past. And yet, despite the viewer erosion, Madison Avenue has yet to find another venue its executives trust as much to reach potential consumers. Netflix and Amazon don’t run traditional video pitches. YouTube has been besieged with concerns about the appropriateness of some of its content for mainstream advertisers, and marketers have yet to be fully satisfied with the measurement available of Facebook’s effectiveness.


If any digital outlet has the muster to win some of their dollars, it’s Hulu. The company has always run commercials, and yet done so with an eye toward the behavior of streaming fans. Hulu runs fewer ads than TV networks and the bulk of its content is past and current TV programs – the kind advertisers are currently rushing to support.


Hulu’s efforts could cause some worry for certain cable programmers. Due to the dynamics of this year’s market – higher demand for TV time and a lower supply of viewers – advertisers are moving first to get deals done with the owners of the most-watched programming, including late-night shows and sports telecasts. That has left some of the owners of lesser-watched cable networks grappling to get the same rate increases their broadcast rivals have secured. If Hulu is offering scaled-back rates for big spenders, it might take more money out of the market.


Hulu said in May it had seen a surge in customers, notching 26.8 million subscribers and 1.3 million using promotional accounts. In 2018, the streamer said it had 25 million subscribers. The company has also been busy stocking its pipeline of original programming, unveiling everything from a miniseries based on “Catch-22” to a dramatic project involving Kate McKinnon.


With those increases come an opportunity to serve more ads to users – and more inventory to sell. Hulu isn’t only chasing traditional national ads. It also has teams geared to selling spots to local advertisers; marketers looking to use programmatic advertising; and direct-to-consumer sponsors as well.


While Disney has put its entire TV ad-sales team under the aegis of a single executive, Rita Ferro, Hulu’s team remains separate. Disney only secured operational control of the company a few weeks ago. Peter Naylor, Hulu’s ad-sales chief, has vowed to ramp up the sale of new commercial formats that don’t interrupt the viewer experience. In recent months, Hulu has begun testing “pause ads” with Coca-Cola and Procter & Gamble and expects to unveil a new ad model specifically for people bingeing several episodes at once.

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