Pay for (Impression) Performance: HULU’s New Ad Model

Jack Blog

April 17th, 2012 By Jack Morton

If you know the digital media world, you know that, just like with other forms of mass media, you’re generally paying for estimated impressions, not actual ones. That’s to say that, people walk away from the TV for a snack when shows break, turn down the radio during commercials and sometimes never scroll down to where your ad lives on a website. Impression counts are driven up, but no impression is left with consumers.

Hulu is changing all that. The site’s new guarantee to advertisers seems like a no-brainer, but is actually pretty revolutionary. JP Colaco, Senior VP of Sales at Hulu said in AdAge: “We aren’t going to charge more for this. If you pay for a full impression, you will get an impression, full stop.”

Advertisers are generally charged for an impression when an ad starts playing, but under Hulu’s new model, the charge will occur at the end. Commercials that aren’t fully watched won’t cost advertisers a cent.

For Hulu, the decision only cuts down on billable inventory by four percent (Hulu’s completion rate is a stellar 96 percent for ads). But will this set a new expectation for other advertisers? Pay for click is popular, pay for performance is ideal, but will even impression counts start to be held to a higher standard?