Monday, October 3, 2011

The Power of Choice in Advertising - Smart, IMO

The Power of Choice in Advertising

October 3rd, 2011 by JP Colaco SVP of Advertising

Management guru Peter Drucker once famously said, “Efficiency is doing things right; effectiveness is doing the right things.”

Drucker’s observation was spot-on. We share his belief that effectiveness is doing the right things — especially in advertising. This belief has driven our relentless focus on building the world’s most effective video advertising service.

Carefully balancing the needs of all our customers (users, advertisers and content partners) is a core part of achieving our mission. We believe that by offering users a premium viewing environment and relevant, targeted ads, we will reduce budget waste for advertisers and drive higher engagement, brand and message recall, likeability, and purchase intent among consumers. These improvements facilitate higher ad prices, which gives us the ability to better monetize content on behalf of content owners.

We conducted a significant research project with 1,500 people to help us better understand what users really want from an advertising service. We were told by users that they’d like us to innovate on two dimensions: more choice and greater control.  Users are tired of seeing ads that are not relevant to them, and are eager for more control over their ad experience. Below is some of the actual user feedback from the study:

  • “I would let the viewer pick the ads he wants to watch.”
  • “I would replace the commercials I watched with ones that were relevant and interesting to me.”
  • “Maybe the Hulu website could offer a choice of what kinds of commercials consumers could watch.”
  • “A choice of commercials to watch – a lot of the ads weren’t relevant to me and it would be great if I could skip them.”
  • “Allow for a choice of ads we see during or before the show.”

We’ve always believed that choice and control were instrumental to building the world’s most effective video advertising service. The unique interactive nature of our online streaming service enables users to actively participate in their ad experience. Our first approach to provide more choice and control was introduced with the Hulu Ad Selector, an ad innovation that came to market when Hulu launched publicly in 2008. The Hulu Ad Selector allows users to choose to watch one of three ads from the same brand (e.g. Coca-cola, Diet Coke or Sprite) or one ad from a selection of three different brands. Since 2008, we’ve seen that approximately two-thirds of users choose to participate when presented with the Hulu Ad Selector option. We’ve also found that the power of choice drives nearly 2x higher effectiveness metrics when compared to a standard pre-roll.

The strong performance history of Hulu Ad Selector coupled with the consumer input from our latest research project helped drive the development of our latest ad innovation, Hulu Ad Swap.

Hulu Ad Swap is the next evolution in user choice and control — an ad innovation designed to dramatically improve the advertising experience for users and results for brands. Hulu Ad Swap puts complete control in the hands of the user by enabling them to instantly swap out of an ad they are watching for one that is more relevant.

Here’s how it works…When an ad begins to play, a user can click on the Hulu Ad Swap icon in the top left corner of the player and bring up a number of ad choices, customized to that user’s profile and previous ad viewing preferences.

At this point, the user can select a more relevant ad from the available choices.

The advertiser whose ad initially began to play is not charged for that impression. This is a win-win scenario for both the user, and for the advertiser. The user now has ultimate control over their ad experience and the advertiser does not have to pay for an impression that would have been wasted.

In an online environment, advertisers have many more tools they can use to engage with key audiences, and in ways that are proven to improve brand recall, message recall, likeability, and purchase intent. With Hulu Ad Swap in particular, advertisers now have the ability to connect in meaningful ways with the consumers who are specifically interested in their brands.

We’ve been testing Hulu Ad Swap over the past several months, asking consumers for their feedback in shaping the product. Since testing began, we’ve found that this feature has a significant impact on effectiveness metrics, improving unaided brand recall by 93%, brand favorability by 27%, purchase intent by 35%, and stated relevancy by 46%.

As one user said, “It was pretty fun when the commercial would start and you knew you could change it if you wanted to. I kinda looked forward to it.” I couldn’t have said it better myself.

We consider ourselves fortunate that we have the opportunity to be engaged in a meaningful feedback loop with users, advertisers, and content owners on a daily basis.  We are also fortunate to find ourselves in the thick of such an exciting time for the video advertising industry. It is this feedback loop that drives us to become the world’s most effective video advertising service.

We hope you enjoy using Hulu Ad Swap as much as we enjoyed building it. Let us know what you think!

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