March 22, 2019
Anna Hubbel, writer at AdvertiseMint, Facebook ads agency
With its latest drop in price for its ad-supported service, Hulu has become an attractive advertising platform for digital advertisers.
Earlier this year, Hulu announced that it was lowering the cost of its ad-supported plan by two dollars per month. As a result, marketing analyst Emarketer doubled its forecast for Hulu’s US gross ad revenue growth between 2019 and 2020 from 11.4 percent to 22.7 percent.
The timing of Hulu’s price drop made it even more of an attractive option for viewers. Hulu announced the price drop shortly after Netflix raised its subscription costs. To make the ad-supported option even more appealing, Hulu strategically raised its cost for Hulu + Live TV at the same time.
Emarketer predicts that more viewers will be drawn to Hulu over other video streaming services as a result of its price changes, which will mean more ad revenue.
“In such a competitive video streaming landscape, Hulu cutting prices for its low-tier ad-supported streaming subscription will almost certainly increase viewership, attracting those who had been on the fence about having the entry-level Hulu option,” said Monica Peart, senior director of forecasting at Emarketer.
When the option is cheaper, Emarketer said viewers typically don’t mind seeing ads while streaming. Specifically, 56 percent of US viewers are okay with ads if it means a reduced fee.
Additionally, out of those who pay for Hulu + Live TV, according to Emarketer, about 50 percent watch on-demand or recorded programming, which include ads.
Hulu is giving advertisers more options with new ad units as well. Recently, the company introduced a static unit that displays when streaming is paused. This new ad option gives advertisers even more ways to generate impressions and engagement.
Both its price cut and its rollout of the new ad unit demonstrate Hulu’s commitment to ad sales. Although 44 percent of US viewers would ultimately prefer ad-free streaming, a lower price for ad-supported content is a sacrifice many viewers may be willing to make. With Hulu’s ad-supported subscribers already up 40 percent year over year in 2018, before the price cut, there is now even more growth potential. Advertisers who want to run TV ads may start flocking to Hulu to reach their audience.
Image Courtesy of EMarketer
As the competition for subscribers rises, it won’t come as a surprise if Netflix soon rolls out a cheaper, ad-supported plan to stay in the game. With customers unhappy with the service’s recent spike in cost, Netflix may have to look at other revenue options. Offering ad-supported content would be the next logical move.