Thanks
to shows like "The Simpsons" and "CSI," Hulu is finally charging more
for ads online than during primetime. According
to June Sanford C. Bernstein & Co. report, Hulu is charging
almost double the rates FOX gets for the Simpsons online. Fewer ads
served during the program means that these shows are still making less
money online, but the higher rates are indicative that when audiences
move online, advertising will move with
them.
Marketers typically pay $20 to $40 per thousand
viewers for a prime-time ad. But according to the Sanford C. Bernstein
report, "The Simpsons" cost $60 per thousand
viewers.
According to Bloomberg:
"Marketers, who are now considering
commitments for the 2009-2010 TV season, are willing to pay more because
TV.com and Hulu.com, owned by investors including News Cor., NBC and
Walt Disney C., provide committed viewers who actively seek out shows.
There are fewer commercials, and consumers are twice as likely to recall
Web ads."
That's good news for a site like Hulu —
unless they start charging for content. News Corp. has been threatening
to charge for access to Hulu, but fees could stunt Hulu's audience
growth. And the advertising rates for the site's
shows.
As it stands, the primetime audience shrank 3.6
percent last season. But the online audience for premium video content
is still too small to replace television ads.
If
websites start charging for content that consumers are accustomed to
watching for free on television, they may not be able to get the
audience numbers necessary to charge premium
rates.
But large advertisers are shifting their ad
budgets online. From Bloomberg:
"Intel Corp., the world’s largest semiconductor manufacturer,
has shifted spending to sites including Hulu as part of a $100 million
worldwide marketing campaign, according to Arlene Villanueva, global
media director for the Santa Clara, California-based company."
General Motors is also sending its brand building
dollars online.
But online ads aren't nearly ready to
replace primetime. Sanford C. Bernstein predicts that ad sales at the
four networks will drop 10 percent this year to $12.8
billion.
And the online component still has an
earnings flaw. There aren't as many ads shown during online
videos.
As a result, even ads that are earning premium
dollars aren't making as much money for companies. A "Simpsons" episode
on Hulu has 37 seconds of ads, compared to the nine minutes of ads that
air during a half hour of network programming.
But
getting large brands to spend more for viewers online than on television
proves that if and when audiences move to these sites, advertisers will
come with
them.