Hulu Now No. 2 Online-Video Site, Behind YouTube

Adding Facebook, MySpace Social-Networking Tools

by Michael Learmonth 

Published: March 12, 2009

NEW YORK (AdAge.com) -- One year after coming out of private beta, Hulu crossed a significant milestone: By one measure it's now the No. 2 video site in the U.S. behind YouTube, and the biggest purveyor of professional video on the web.

Hulu saw a 33% surge in traffic after its first attempt to market itself to the general public.

The site hit that mark in February, according to unreleased figures from Nielsen Online's VideoCensus, after a 33% surge in traffic fueled by a Super Bowl ad, Hulu's first attempt to market itself to the general public.

That growth spurt, with 309 million video views, shot Hulu ahead of Yahoo and MySpace. Unique viewers were also up 31% to 9.5 million, but Hulu disputes Nielsen's unique-visitors figure, and ComScore puts it nearly three times as high.

The new figures put into context what NBC Universal and News Corp.'s joint venture has achieved, and the growing power of TV content on the web. NBC and Fox programming got Hulu off the ground, but now it has 130 deals with networks and studios. Its player has been embedded nearly 4 million times on more than 100,000 websites.

Higher CPMs for TV shows
In the grand scheme, saying you're No. 2 in online video is a bit like saying you're the tallest midget, as YouTube boasts 5.2 billion views a month. But it's still significant, particularly given that TV shows can garner ad rates as high as $40 to $50 per thousand viewers online, and as Hulu makes its second tour of agencies for pitch meetings as part of its informal upfront sales push.

The challenge now for Hulu is to keep growing and pad its lead. To that end, Hulu is saying hello to social networks, with a community feature it calls "Hulu Friends," which allows users to import profile information and contacts from Facebook and MySpace, as well as e-mail clients Gmail, Yahoo Mail and Hotmail. Hulu Friends will allow users to see what their friends are watching, and make recommendations.

The point here is to encourage users to spend time on Hulu itself, rather than third-party distributors such as Yahoo TV and TVGuide.com. Hulu gets a higher percentage of the gross advertising sold against viewers on Hulu (30%) vs. those watching Hulu on partner sites such as Comcast's Fancast or TVGuide, which take a 10% cut. Community functions will also keep viewers around longer, and allow Hulu to show them more ads.

"From an ad perspective, this is about bringing users to Hulu and having them spend more time on the service," said J.P. Colaco, Hulu senior VP-sales.

Targeting users
But there's another upside: It will encourage more users to register, which will allow Hulu to target them based on demographics, location, viewing history and preferences. So far, Hulu execs said several million users have registered to receive customized recommendations.

As part of its distribution deals with content owners, Hulu can't sell individual TV shows such as NBC's "30 Rock"; rather, it sells demographics, so the ability to target a large number of users across many shows is Hulu's proposition.

Soon, when its exclusive distribution deals with NBCU and News Corp. expire, Hulu will be one of many sites, including Veoh, Fancast and CBS's TV.com, with roughly the same or similar content.

That means Hulu is in a race to make itself essential to online TV viewers through features such as search, recommendations and community, and to advertisers through targeting.