Talk Bite: Hulu, You Complete Me.

Online planning lingo can be tough to translate. With terms like “interstitials,” “cookies,” and “JavaScript,” it’s nice to come across the parts that just make sense to you as an advertiser. Case in point? Cost Per View (CPV). Simple enough concept, right? You pay for a certain number of eyeballs to watch the ad placed for a client. But what’s the paid guarantee that anyone is watching the punchline at the end? None, really…until now.

Hulu recently announced they were moving their ad beacons (or as I like to think of it, their “charge” notification) to the end of the video, so that advertisers are only charged for completed ad views. Sounds like a common sense way of charging, but it’s the first of its kind. Currently, CPV doesn’t always guarantee a full completion. In fact, advertisers tend to purchase online video on a CPM (cost per thousand), but review and report metrics such as video completions. A user could click on a video, watch for a few seconds and move on. Not really a true “video view,” if you ask me.

Hulu shows more video ads to consumers than any other site or service in the U.S. With more than 1.5 billion video ad views in February 2012 alone, the risk of changing their pricing model is one they can afford. Hulu specializes in long form video, and its users get the feeling of TV-like commercial breaks. This has contributed to their unusually high completion rate of 96%, when 88% is the average for long form video (according to a study by video-ad-serving company Freewheel). They’re in a good position to leverage this new selling point to advertisers, who will ultimately pay a higher CPV to get guaranteed completed views. Moving their ad beacon to the end doesn’t threaten their business model when they’ve got so many users watching the full ad anyway.

So have Hulu’s guaranteed video views changed the game for advertisers? It’s still hard to eliminate the obstacles standing in the way of online advertising. The new pricing model can’t account for flipping between tabs or checking your Gmail account for the 30 to 60 seconds the ad is playing. So ultimately, like most channels, there’s no guarantee for active engagement. It has yet to be seen if other online video providers will follow suit. With weaker completion rates, it may be harder for them to step up to the plate and move their ad beacons to the end as well.

So stay tuned – at least to the end of this article.

(Thanks to Ad Age Digital and econsultancy.com for their insight on Hulu’s new pricing model.)