How Marketers Can Ruin Video Sites Like Hulu For The Rest Of Us

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A Brief Intro...

I started this three-part series with a discussion of "the new creativity" and asked if the freemium business model would be better for video content sites like Hulu. Then, I outlined 7 ways Hulu could benefit from a freemium model.

And finally, after all of this persuasive writing, I'd like to examine how a few boneheaded marketers will probably f*ck up the whole "free video content" thing for everyone.

Intrigued? I thought so. Let's get into it.

They'll Never Pay For It. Until They Do.

In my last post, I outlined a plan where Hulu could profit by packaging some already- (or mostly-) existing assets into an awesome premium package some viewers would gladly pay for.

Hulu would be happy because they'd be making money. Their free audience would be happy because they'd still get great shows for zilch. And their premium audience would be happy because they'd get a bunch of perks and cool stuff for a nominal fee.

You'd think everyone would be happy, right?

Peter Verna, senior analyst with eMarketer is pessimistic that these perks could be bundled together into a premium package. He was quoted in a November OMMA article, "Trim Marks":

"It's fair to say that consumers are generally not willing to pay directly for online video...

I also think that if Hulu and YouTube are going to start charging for some of their content, they should limit it to feature films. Virtually everything else they offer seems to work better in an ad-supported context, with the caveat that user-generated clips are challenging to monetize through any model."

True, most of the examples in "Trim Marks" were from digital studios creating original content. But comments like Verna's certainly apply to sites like Hulu and the lessons ought to be applied to any website specializing in video content. The history of online video over the past 10 years or so would support his notion that people generally won't pay for online content.

My point is that premium customers aren't paying for online video. They're paying for more flexibility. They're paying for the ability to suggest shows or brag to their friends. They are paying for a better user experience.

A Lonely Voice Crying Out From The Wilderness

Of course, not all agencies are going to challenge their clients to try new business models. Many are happy to pretend the world isn't changing.

In that same OMMA article, John McCarus, VP and director of brand content at Third Act, said "We have made an investment in this and we are doing everything we can to connect the stars in the content-creation community with clients that understand the space and have an appetite."

OK, that's McCarus' idea, but will this sit well with content creators? Isn't this the definition of selling out? If online trust is built through honesty, sincerity, and reputation, I don’t see how this will work long-term. Sure, one-offs will flock to it, but creators looking to connect will likely shy away from this business model.

But the suits go ever further! Studios need to "make room for advertisers to play an active role in the shape of a show," says Alan Schulman, executive creative director for The Digital Innovations Group.

Are you friggin' kidding me? So instead of advertising against content, they will dictate the content as well?

Schulman pushes it even further: studios "should expand their base of business from pure narrative storytelling to weaving other types of narratives like brand-centric edutainment into their offerings."

Edutainment? Yeah, nothing says viral video success like "edutainment." This is a guy with his finger on the pulse on the YouTube generation alright </sarcasm>.

Let me be clear: These are really, really bad ideas. It's wedging the old model (selling ads next to content) into a new form (online) while diluting the content that attracted your viewers in the first place (edutainment).

This is a recipe for failure.

Smart Video Advertising

If you're going to sell ads, you need to be smart about it. Here are a few hints about video ads you should know if you plan to be in this business 2 years from now:

  1. Ads need to be contextual. Since there is no AdWords for video, this means a lot of work either tagging or actually selecting the ads that run against your content.
  2. Users will not pay for content. As I mentioned in my last post, they will pay for a package of perks. They will also (for now) tolerate a pre-roll ad. But dictating the content? Good luck!
  3. Any product placement should be handled subtly. Yes, it was Nestea that was spilled on and gave magical powers to the keyboard in CTRL. But no one needed to shove it in our faces or “educate” us about how great a sponsor was. Just make it work.

In short, if you want to create business advocates – and you should – you must think of their needs first.

And that has been the point of this blog series. It began with a discussion of which business model is best for online video consumers. Then there were suggestions for Hulu to improve their user experience. And finally a warning against putting your desires before the customer.

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(Image courtesy of Charlottedallot via Flickr)