Wednesday, December 09, 2009

Hulu’s On First?

By Nathan L. Gonzales

It’s hard to imagine a place with millions of eyeballs and no political advertising.

Last cycle, the on-demand video Web site was only in its infancy, but with a growing audience, it could be difficult to ignore in future elections. This year, there has been a trickle of online video advertising on other news Web sites, and Hulu could be next.

“It’s another good way to get people who are spending more and more of their time on the Internet,” said Democratic media consultant Julian Mulvey, who is working with Boston Celtics co-owner Steve Pagliuca in the special Massachusetts Senate primary on Dec. 8.

Last week, the Pagliuca campaign began running 15-second pre-roll ads (video ads running before desired content) on across the Bay State.

The National Rifle Association ran 15-second pre-roll ads on in selected markets in this year’s gubernatorial race in Virginia.

“More people are watching TV with a laptop on their lap,” said Republican media consultant Brad Todd, whose firm OnMessage Inc. produced the NRA spots. “You’d like to be in both places and catch them in both directions.”

In the future, media consultants may be wrestling with potential voters who are watching television on their computer with the regular TV set off. Hulu is one place the voters are likely to go.

Launched in March 2007 as a joint venture with heavyweight media partners including NBC Universal, News Corp., which owns Fox, and Disney-ABC, Hulu has grown to the 30th most-visited Web site in the United States, according to Alexa, a Web information company. Hulu has more than 5.5 million page views per day, CubeStat, which follows Web traffic, has found.

On Hulu, people can view episodes or clips from hundreds of television shows (including “The Daily Show,” “The Office” and “The Simpsons”), and movies for free because of commercials placed before and throughout the programming.

Thus far, Hulu has been a refuge from the deluge of candidate ads. There have been no political ads on the site, according to a representative of the company, unless you count the 1988 Willie Horton ad and a few dozen other historic ads in the site’s archives.

Just as they do with television advertising, campaigns can target geographically and they can attempt to target demographically by choosing specific programs or Web sites.

But there are some unique advertising options on Hulu. Campaigns could utilize users’ demographic information, if they’ve registered with the site, and feedback on their ads in order to fine-tune future buys. Also, instead of a traditional 15- or 30-second ad, a campaign could sponsor an entire show and pay for the rights to blanket a particular episode with all video and banner advertising.

Jean-Paul Colaco, Hulu’s senior vice president of advertising, told Fast Company magazine in its November profile of the company that blanketing doubles recall rates compared to traditional broadcast advertising. It also allows Hulu to charge more for its ads, potentially affecting campaign budgets.

Unlike Pagliuca or other personally wealthy candidates, most campaigns are dealing with finite resources. Running pre-roll ads on the Internet are left to campaigns with “Cadillac budgets,” in the words of one Democratic consultant, and that tactic is often scrapped at the first sign of fundraising difficulty.

All campaigns have to balance cost, affordability and viewership when it comes to ad buys, and there is concern that money spent on Hulu is wasted because the ads reach young people who are less likely to vote.

Forty-one percent of Hulu viewers are ages 18-34 and 39 percent are ages 35-49, according to Quantcast. Even if older voters start watching Hulu, there are other proven tactics to reach them, one Democratic strategist said.

Another challenge for consultants is finding a race where using Hulu and other Web sites will work effectively. Even though Hulu starts with millions of viewers, once it starts breaking down to the state or Congressional district level, then registered voters, then likely voters, the slice of the pie gets smaller and smaller and advertising on the site becomes less efficient.

Online video advertising is not immune to some of the challenges that ad-makers have with television, such as the mute button or multi-tasking. Rather than changing the channel, a person might be e-mailing in another window during the ad.

For now, candidates who can’t afford it may choose to run a single ad on Hulu in an effort to get traditional media attention. Political reporters are more likely to write a story about a produced ad (particularly the novelty of an ad on Hulu) rather than regurgitate another news release.

Some media consultants only talk casually about Hulu around the kitchen table with their kids rather than talking strategy on a conference call with a candidate.

“This cycle, it’s considered,” said Democratic media consultant John Lapp of Ralston Lapp Media about advertising on Hulu, “where last cycle it was thrown out out-of-hand.” For all campaigns, it comes down to priorities.

“It has a place and has some value, but it wouldn’t be where I start,” said Paula Hambrick, a media buyer for Chicago-based Democratic consulting firm Adelstein Liston. “You still have to do the fundamentals.”

Campaign strategists agree that broadcast television advertising is still the critical component of a successful campaign.

For example, Pagliuca’s $10,000 ad buy on pales in comparison to the millions of dollars he’s spending on broadcast television. Online ad spending (including nonpolitical ads) is growing by more than 40 percent annually and totals about $1 billion, but it’s minuscule compared with $46 billion for broadcast ad revenue, according to Fast Company.

“It was a lot easier to be a media planner in 1952,” Hambrick joked. “Everyone wants to be on top of a trend, but you have to make sure you cover your bases.”

As advertising on the Internet gains more attention, campaigns can’t forget the fundamentals of buying television ads during the news and morning shows. The first wave of pre-roll ads online is likely to mirror that strategy. Depending on their level of sophistication, local news Web sites could be one of the first hot spots for online advertising.

“No one is sure if it will work,” said one Democratic media consultant, whose firm considered a Hulu buy for a local race but decided to increase its cable TV buy instead.

Overall, party strategists on both sides of the aisle agree that we’re still in the infancy of voter contact on the Web. And future online political advertising could be dictated by broader trends as companies test business models on the Internet.

“Ad-supported only is going to be a tough place in a fractured world. ... You want a mix of pay and free,” News Corp. Chief Operating Officer Chase Carey warned earlier this year. If Hulu starts charging viewers for access in 2010, its audience would likely decline and even once-intrigued political campaigns may lose interest.

Whatever form online video advertising may take, Todd believes Republicans should be on the front line. “We didn’t just make some policy mistakes, we lost some elections because our campaigns were getting stale,” he said.

This story first appeared in Roll Call andd on December 1, 2009. 2009 © Roll Call Inc. All rights reserved.