Hulu has done a nice job cementing itself as a leader in online video by offering ad-supported premium content. But the website is starting to experience some very uncomfortable growing pains, and advertising is at the heart of the problem, Adweek reports.
Hulu's own ad sales staff is reportedly not getting along with the sales staffs from each of the website's partners (ABC, News Corp, and NBC Universal), sometimes undermining the networks by offering lower CPMs and making deals to include ads in certain shows -- something Hulu isn't allowed to do.
The three networks are given the first chance to sell advertising on their own shows, and Hulu can buy that inventory back at any time. Hulu's staff cannot sell on individual shows or networks, but has to sell buckets based on genre or demographics. No matter how advertising is sold, the three partner networks take home 70 percent of the ad revenue.
The infighting seems to be stemming from Hulu's popularity. Its ad business is failing to keep up with its growth, and there have already been rumors of a subscription model. That's the last thing advertisers want, because it's sure to curtail the site's rapid growth.
