How The TV Industry Just Hurt Television Advertising

What is the value of your personal data to an advertiser?

Consumers are rightfully concerned about what is being done with their data, where it’s going and how it’s being used. It’s a big business. It’s a huge business. It’s often the trotted out horse when people want to know, exactly, how places like Facebook and Twitter are going to make the billions of dollars that they are required to generate, based on their market capitalization. In simplistic terms, we’re often told that the goldmine is in the data. The knowledge of what people are doing, and how to better target them with relevant and timely messaging, is what’s going to win the day. The evolution of big data in business jargon is pushing this further. The notion that we can couple disparate databases and leverage the information with speeds never-before-available to businesses to create more interesting outcomes. It all sounds so hopeful, so dreamy and… so powerful. This is where the proverbial rubber meets the road for marketers. The creation and distribution of media is cheaper, more targeted and super-relevant. 

Media will know things that we’ve previously never known. Cool.

Everyone loves Hulu (if it’s available in your location). This joint venture of NBC, Fox and Disney was created as a place where consumers can, primarily, watch ad-supported video (with a focus on TV shows) for free (and yes, there are subscription services available that offer a richer catalogue of content and more depth of functionality). Of course, this was the major network’s reaction/creation/competition to platforms like Netflix and Amazon. Disrupt the disrupter, as it were. Breaking it down: the television networks developed a digital channel to distribute their content (and an added traditional advertising stream).

If you were Hulu, how would you amp up your sales?  

That’s easy: Increase both the amount of content you are showing (thus, more ads will run) and/or increase the quality of the content (so that you could charge more for the advertising based on the quality of the viewership). That’s one way to go. Well, Hulu announced yesterday that it will offer the option of having no advertising during shows for $11.99 a month. Yes, this makes Hulu much more of a direct competitor to Netflix, Amazon, and the like, but it also sends a very interesting message (especially because their current premium subscription service is $7.99, but still has commercials) to the media industry. The average consumer is worth about four bucks a month. That’s it. What makes this more interesting? How about these quotes from Hulu CEO, Mike Hopkins:

• “There’s a whole set of customers that we saw in the research and in the metrics that aren’t interested if we have advertising.”
• “The whole intent is to really target a new consumer who has tried us before and churned out because of the advertising.” 

What about the advertising?

People are willing to pay more for content that doesn’t have advertising. Who would argue with that? It’s confounding. Hulu has a ton of data about their users. Who they are, what they are watching, how long they’re watching it for, and much, much more. If data is going to drive advertising’s future, doesn’t Hulu have this future model? They know more about their viewers and viewing habits than most. Why isn’t the advertising and value of it being demonstrated? Shouldn’t Hulu be getting much more than $4 per viewer in terms of media spend? Shouldn’t all of the ads being shown be targeted, relevant and desired by their viewers? People hate advertising. This is not true. People hate bad advertising. If ever there was an opportunity to prove how efficient and effective a television commercial can be, Hulu would be the place. Isn’t the future here? 

What kind of signal do you think Hulu is really sending to the advertising world?