How Hulu plans for half its ad revenue to come from non-intrusive ads | Advertising Age

Hulu plans for half of its ad revenue to come from non-intrusive ad formats in the next three years. It’s one of the pillars of its strategy as the industry heads into the annual upfront ad haggle.

To get there, Peter Naylor, senior VP of advertising sales at Hulu, says the company will use data to guide the creation of new ad formats. For instance, Hulu found that 35 million times a day viewers were pausing content. Naylor says this was an opportunity to “put commercial messages in a thoughtful, smart way in a non-intrusive ad break.”

Hulu is currently working with Coca-Cola and Charmin on so-called “pause ads” that are delivered in this way.

The company is also experimenting with “situational” advertising. Since in over-the-top video there is clear indication of viewer behavior, Naylor says Hulu knows when people are pausing or binge-watching programming. “We know when people are catching up.”

Hulu will also offer marketers the ability to serve ads when viewers are watching episodes of content back-to-back. And ahead of Hulu’s reboot of “Veronica Mars,” it will stream the old seasons of the series. This environment, Naylor says, is also attractive for sponsorship opportunities.

During the upfronts, TV networks will be looking to woo direct-to-consumer brands that have traditionally focused their marketing efforts in digital. But as they look to grow their businesses, many have realized they need to expand into video storytelling.

Naylor says the OTT marketplace offers the perfect entry-point for these brands. Platforms like Hulu, he says, can target specific audiences and also do so at price points these companies “will find palatable.”

While Hulu is working to create a different ad experience than consumers would find on linear TV, thus far much of the OTT experience hasn’t deviated meaningfully from traditional TV. Naylor says the best ad model for the OTT space is “restraint.”

Hulu has capped its commercial pods to no more than 90 seconds. Since the viewer is in total control and can easily move to ad-free environments, the industry “can’t repeat what’s been done in conventional TV and hope the audience will tolerate it,” Naylor says.

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