Bryon Schafer: October 2011 Archives

An Inside Look at Hulu Ad Swap

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When we pursue a research project to advance our goal of building the world’s most effective advertising service, we start with some foundational questions: What problem(s) will the innovation solve? Can it scale? How will we measure the effects? What are the paths to increasing monetization? Will this create value for our customers?

Of course, we asked these same questions when designing Hulu Ad Swap, announced live today onstage from the IAB MIXX Conference & Expo during NY Advertising Week. 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.

We conducted research to determine whether Hulu Ad Swap could quantify (in both statistically reliable and valid terms) the improvement of the ad experience for advertisers and viewers across a variety of dimensions.

Going into the study, our thesis was that users wanted more choice and control, and  advertisers wanted to eliminate waste (via targeting) and drive better outcomes (improved effectiveness measures).  A recent Advertiser Perceptions study commissioned by the IAB entitled, An Inside Look at Demand Side Perceptions of Video Advertising quantified the criteria that advertisers, marketers, TV and online video buyers look for in their online video partnerships. Here’s what they stated (in rank order):

1. Targeting 82% - 88%
2. Results 85% - 86%
3. Reach 68% - 84%
4. Cost 28% - 46%

Advertisers want better targeting and results, and viewers want more choice and relevancy, so naturally the question we wanted to address was simple: through a format rooted in choice, could we deliver on improved relevancy and results? 
Our success measures were the predictive success measures that brand marketers use: Brand recall, favorability and purchase intent.  

Results from the research study were very positive. Video ads that a user proactively chose to swap into (versus a video ad that was served at random) performed to a significantly greater degree than those that were not:

  • Unaided Recall of the brand went from 30% to 58% (+93%)
  • Aided Recall became near universal, from 59% to 91% (+54%)
  • Brand Favorability went from 34% to 43% (+27%)
  • Purchase Intent went from 23% to 31% (+35%)
  • Stated Relevancy went from 15% to 22% (+46%)

The measured performance of choice-based ad formats like Hulu Ad Swap illustrates why offering interactivity can be a powerful mechanism to improve the effectiveness of advertising. Interactive formats can significantly exceed the effectiveness and efficiency of traditional video ad formats for the following reasons:

  • Self-addressability—the consumer can choose the most relevant ad to them at that moment.
  • Increased attentiveness—when a choice is made, a viewer is invested in seeing the outcome.
  • Cognitive dissonance—consumers like to feel justified about the choices they make.

Going forward, we are not expecting all Hulu users to swap ads every time they are offered the option to swap. The power behind Hulu Ad Swap is that a user has maximum control over their ad experience, and can swap their ad if they choose to do so. In fact, we expect response rates of around three percent. But for those who do choose to interact with this feature, we’ll have learned a little more about their preferences. We can turn that learning into a better ad experience for our users, a better ad platform for our advertisers, and an improved monetization vehicle for our content partners.

We are continuing to research Hulu Ad Swap, and as we work to improve this ad innovation over time, our goal is to deliver both a more frictionless consumer advertising experience and even better results for our advertising customers.

With regards to the research we conducted on Hulu Ad Swap, there’s a more comprehensive research FAQ you can read here: Hulu Ad Swap Research Results.

About the Author

sp_schafer_bryon.jpgBryon Schafer
Director of Research & Sales Strategy, Hulu

Bryon Schafer is a member of the IAB Digital Video Committee and serves as Hulu’s director of research and sales strategy, where he is responsible for all research efforts across Hulu’s business units. This encompasses audience measurement, advertising and marketing research, as well as global market research in support of product development. In addition, Bryon leads the company’s advertising sales strategy, where he is tasked with “making it easy” for advertisers to buy Hulu. Prior to joining Hulu in 2008, Bryon held marketing and media research roles at Warner Bros. Home Entertainment Group and ABC Television Network. Bryon holds a BA in Anthropology from Wesleyan University in Middletown, CT, and he began his career in the media planning department of Ogilvy & Mather in New York City.