Hulu Has FOMO

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When you are at work, do you check your email frequently to make sure you haven’t missed anything?

At home, do you find yourself wondering (and maybe even worrying) if you should you have gone to happy hour with your coworkers instead of coming home and rewatching Season 2 of Mad Men?

At some point in our lives, we all grapple with FOMO–fear of missing out–and it is not just people who experience it at some point in their life. Hulu must have been feeling that same way prior to the moment when they announced in August that they would open a private ad exchange powered by LiveRail, Facebook’s video ad exchange, that would make it easier for marketers to purchase targeted ads. This move will allow Hulu to let brands merge their own data with its data on viewer demographics and what shows they watch to ensure that the ads are touching the right consumer.

vampirediariesFor example, as a 40-something-year-old male living in Seattle, if I watch episodes of Sons of Anarchy, I might see ads for Harley-Davidson or Shave Club (or, God forbid, Viagra) in between moments of Clay scheming and Gemma scowling. Or take my 23-year-old niece who is obsessed with the CW classic, The Vampire Diaries. She might see ads for Cover Girl or Eternity by Calvin Klein in between moments of Stephan plotting and Elena pouting. This move on Hulu’s part means that the company is not only able to connect the show’s content to the way you and I are seen as viewers based on our age, gender, or location, but it can make direct connections between us as viewers, the content we are watching, and the brands that will best fit what they perceive our interests to be.

How is this strategic change on Hulu’s part illustrative of a corporate case of FOMO? Why would a company whose number of paying subscribers rose to 9 million this year somehow feel left out or left behind in the streaming video industry?

What this business development indicates is a move away from traditional television advertising to programmatic–offering brands the ability to steer their ads towards a specific viewing audience. In April 2015, the Interactive Advertising Bureau (IAB) found that digital advertising revenues in the U.S. rose to an all time high of $49.5 billion in 2014, a 16 percent increase from 2013. Mobile advertising rose to $12.5 billion during the 2014 fiscal year with digital video totaling at $3.3 billion. Clearly companies have spent a great deal of money in the past two years trying to link brands to specific programmatic content to better reach specific audiences.

What executives at Hulu have realized is that matching relevant ads to the consumer is the best way to engage with and connect to them as viewers. According to a new study from the Chief Marketing Officer Council entitled “From Content to Creativity: The Role of Visual Media in Impactful Brand Storytelling,” marketers believe visual assets–photography, illustrations, infographics and videos–are key to creating customer engagement. Nearly half of the survey respondents indicated that the use of video and photography is critical to their current marketing and storytelling strategies. 65 percent of respondents indicated that visuals were core to how their brand communicates and tells its story, while 60 percent of respondents also felt that visuals added excitement to content that helped capture attention and ensure engagement with their customers.

With all of this in mind, imagine watching one of your favorite shows on Hulu. Which would you rather see: an ad for a product in which you have little interest, or an ad that touches you in some way because the images and messaging are compelling and somehow connect to the content of the program you are viewing? I’m pretty sure that most people would choose the latter. And if you are a brand spending a lot of money developing creative, engaging video to promote your product, my guess is that you would want those ads to reach the right people to get the most bang for the buck.

hulu-logoMatching relevant ads to the consumer is a main driver to engaging viewers, and programmatic leaders like BrightRoll, AppNexus, and Rubicon paved the way for this to happen in their development of top video platforms that give publishers access to programmatic video, but these platforms only offer/deliver the ads themselves and are not focused on matching the videos to programmatic content. Now Hulu is taking the important step of utilizing users’ viewing habits and combining that with their consumer preferences to offer relevant advertisements in a protected environment to the next level, and there is a lot to gain in doing so.

My guess is that in the next few months, consumers who haven’t opted togo ad-free on Hulu will discover that ads aren’t intrusive. Instead, they’ll find relevant content, which delivers on the promise that online advertising has held for years. When I sit down for an episode (or two, or three, or four) of Sons of Anarchy on Hulu, I’m going to see ads that engage me and make me picture myself on a Harley on the open road — instead of making me check my smartphone to see if I am missing out on something more important.