Hulu Offers Great Content, Raises New Questions About Online Ads

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By Mallory Dash

Hulu, which officially launched last week, has sparked a lot of conversation about the future of online video distribution and the quality of content that is now available to viewers. While the site and its content alone show a lot of promise, there is a new discussion taking place - how to best use high-quality video distribution outlets for optimal digital marketing and advertising.

Although Hulu features content from traditional media outlets like FOX, NBC, MGM and Warner Bros, the online nature of the site requires a different approach to advertising. Hulu currently uses different kinds of advertising, including interactive overlays during shows. Hulu execs have also hinted at future plans to allow viewers to choose the ads they’d like to see during the show. According to Matt Rosenberg of Omnicom Group, “the TV experience is becoming increasingly more interactive, just as the interactive experience is becoming increasingly like TV.”

According to a report by AdAge, the future looks bright for Hulu as compared to other video distribution sites like YouTube and Myspace Video. This is especially true for advertising and media partnership opportunities. The article points out that “a lot of sites that use consumer-generated video can be grainy or even offensive,” whereas Hulu allows advertisers to know ahead of time the quality and content of what their ads will support. (Note: Hulu has not yet made deals with CBS or Disney.)

There are some concerns, however, about Hulu’s long-term viability. This is not a question of content, but rather of their choice in business model. Henry Blodget of Silicon Alley Insider states that Hulu is “still too dependent on a handful of content partners, it bears most of the costs of streaming videos while its partners take most of the revenue, and its content partners are also its primary shareholders, which creates a major conflict of interest.”

For Hulu to capitalize on its product, they’ll have to attract more content partners and continue finding creative ways to implement ad and commercial campaigns. David Cohen at Interpublic discussed the lack of mainstream content from Disney and CBS, highlighting the fact that Hulu is not a complete portal for all premium video, although their search function does allow users to find video not featured on its site. At the moment, advertisers and marketers are still unsure of how to use the full potential of Hulu. “We don’t know yet what is the optimal way for us to play in the video space,” Mr. Cohen said.

Ultimately, Hulu is a promising product with a lot of potential. It’s got powerful backers and successfully leverages video content in ways that other prominent projects have failed.