iMedia: In your opinion, what do Hulu and similar premium video sites mean for the future of traditional scheduled television programming?
Kilar: I think it's going to be good news for the future of television. I haven't seen it said in the press often, but I'm a big believer that media is an impulse business, in that you don't need media. It's not a requirement like food, clothing, and shelter.
Every business that is an impulse or discretionary one that I'm aware of is predicated on convenience. If you make it more convenient to consume those types of services, people will consume more of them. So, if you talk to anyone who uses Hulu, they'll tell you that they're watching more premium video now than they did this time last year because they can do it at a time that's convenient for them and in a manner that's convenient for them.
In the future, for television at large, people will consume more of it because it will be more convenient to do so. In terms of the economics behind it, I think that you're going to see a lot of interesting trends there as well. We've invested significantly and will continue to invest significantly in making advertising more relevant to users. In the process, there's a higher return on investment for advertisers. So with that comes greater monetization on a by-user basis for a given advertisement.
iMedia: You joined Hulu after a long career at Amazon. What lessons did you bring from the online commerce side to the online content side?
Kilar: The main thing that was very helpful from my years at Amazon was the notion that you should start with your customers and work backwards. That's something Amazon was inspired by other companies to do, and certainly Hulu takes that inspiration from Amazon and others, like Disney.
iMedia: Since debuting in March 2008, Hulu has launched various new ad options, including ad selector and branded entertainment selector. What else is on the horizon?
Kilar: There's a lot on the horizon. The short story is that we have a lot of innovation to bring to market. There's one thing in particular that we're very excited about and have begun talking to ad agencies about, and that is the notion of engaging users through questions. The notion of asking a question in place of an advertising slot is something that we're extremely excited about. We've innovated on that technically already, and you'll be hearing more about that in the coming weeks and months.
iMedia: When Hulu was getting started, you were mainly selling run-of-site, by genre, and by demographic. Have your targeting options changed since then, and how will they continue to change?
Kilar: They've changed quite bit. Our goal is to drive the highest return on investment in the world as it relates to premium video.
One of the things we're doing now and that you'll see increasingly going forward is the opportunity to actually focus on behavioral, geographic, and even individual criteria. And by individual, I don't just mean gender and profile information, but also personal preference. So if someone is predisposed to diet beverages versus regular beverages, we'll be able to work with advertisers in that manner.
iMedia: Tell me a little bit about the metrics side. How should brands be measuring the value of advertising within premium online video?
Kilar: Among companies that are investing precious dollars in video advertising, there are four things we commonly hear that they want to measure. And I would feel the same way if I were in their shoes.
No. 1, they want to know about brand recall. When I run an advertisement with a service like Hulu, how many people recall my brand versus those who were not exposed to the advertisement?
The second is the message recall. So beyond just the brand that's being promoted, what's the message that they're trying to get across to the prospective customer?
The third one is favorability. When I take a look at those people who were exposed to my message on a service like Hulu versus those people that were on Hulu who were not exposed to my message, what was their favorability with regard to my product and service? We obsess over the Hulu user experience to the point that the equity that we've built up in Hulu can rub off on advertisers that work with us closely.
The last part, which is ultimately the metric that matters most, is purchase intent. What is the likelihood that the people who were exposed to a message on Hulu will buy the product or service, versus those people who were not exposed to the message? I do think you need to measure at the top of the purchase funnel as well as the very bottom. That's the way we've built our service -- to be very transparent about how Hulu drives all four of those metrics. We share those metrics liberally with all of our clients.
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