Hulu’s a Towering Success — Just Not Financially

Hulu is everyone’s favorite provider of TV on the web, but it’s facing an ideological battle over its future. On one side are its network backers, which would like Hulu to become a paid service. On the other is the advertising community, which would like to keep Hulu free as a test-bed for new targeted-ad formats that can’t be skipped. It’s an important issue, because any debate about Hulu is a debate about the future of purely ad-supported TV, which is increasingly becoming an endangered species. Hulu is the No. 2 video site on sheer volume of video views behind YouTube, yet no one is yet making much money from its model: not its network backers, other content partners and least of all Hulu itself, which has a hard time paying for its bandwidth bills. ”[Hulu] does have to move to a premium model,” said one network exec. “If you look at the business, it’s just not economically feasible to give away programming at low rates.” Hulu won’t comment on its economics, but if you consider that it’s selling video ads and companion banners together in the $40 CPM range, and it appears to be about 50% sold out, when 70% is paid back to networks, Hulu is netting pennies per viewer per hour, about what it costs to deliver video of that quality. One caveat, however, is that a significant amount of Hulu inventory is sold by the networks, which can buy back inventory to sell to advertisers. Hulu gets 30% of that CPM without any of the costs. Also, Hulu has ad deals with many TV networks on different terms.

Read More: AdAge

Target: Upfront Dollars

The Web’s top video ad networks smell an opportunity to go hard after TV dollars during this year’s upfront marketplace. According to several prominent executives, companies like BBE, Tremor Media, YuMe and others are planning a sales push during the next few months as they foresee traditional brands allocating dollars to video in conjunction with their TV outlay for the upcoming season. “No one’s renting out the Ed Sullivan Theater,” quipped Scott Ferber, CEO of TidalTV. “But of course we are pitching these guys. It’s natural for media companies to approach advertisers in the manner they are used to, and that is [during the] upfronts.” Insiders noted that as online video consumption continues to surge, packaged goods and auto brands see the medium as one of the few reliable ways to achieve branding goals on the Web at scale—and are thus poised to up their spend significantly. One bullish ad network exec estimated that dollars in the space, pegged at around $1 billion in 2009, could double this year. Another predicted that some networks could pull in half their 2010 revenue during the upfronts. “This year we’re going to see a major inflection point,” said Matt Wasserlauf, BBE’s CEO. Some buyers countered that those estimates are on the high side. However, they concur that many clients are looking to evaluate their video spending holistically, which bodes well for Web video sellers. “I do agree with the idea that many clients’ strategies are becoming content driven over device driven,” said John Nitti, svp, digital director at Zenith Media. “So you should see some dollars start to flow that way.” “Clearly video is a growing area of interest among our clients, and we are looking to get a little bit formal about the way we plan this in totality,” said Andy Chapman, leader, Exchange at Mindshare.

Read More: MediaWeek

One Minute Match Up Recap: Did they break through at Breakthrough?

Miss the iMedia Breakthrough Summit in sunny Florida this week? Are you an iMedia vet who has slogged your way through the infamous One Minute Match Ups and feeling a pang of nostalgia for that frenetic hour of power? Are you just interested in an overview of the companies shaping the digital media landscape?  Lucky for you the One Minute Match Up recap is here. Here’s a list of the companies I met this week—and a gauge of how well their sales team is doing as describing their wares. Did I get it right? Let me know in comments.

DBG – Digital Broadcasting Group is one of a handful of video ad networks that seem to be more interested in becoming a video producer than a network. They produce branded content on the cheap and bury the production costs in the media buy. I don’t know what this says about their network, but brands are hungry for content. I’m interested in understanding better how they work with creative agencies.

Adconion/Joost/Red Lever – Adconion’s family of properties is another one in the space providing a comprehensive video solution. Now, I’m a student of brand positioning, so I keep busting their balls about creating confusion in the market with all these different companies. However, they are producing some good branded content with Red Lever and distributing that content over their Adconion video ad network. They also just bought Joost, which gives them a potential Hulu competitor. And they don’t rhyme with onion. Oh, and they ROCK because they gave out iPads! Can’t wait, guys. Thanks!

Read More: iMediaConnection