Hulu - The Future of Ad Revenue on the Web

I found the linked article below interesting. It represents a way that I’ve thought for a while you actually could make good money off of advertising on the web – if the consumer buys into it. In this model you have to watch advertising, but the user picks the types of ads he’ll see. Ads are not bad, you just don’t want to watch the ones not relevant or entertaining to you. And it also mentions research that showed higher ad retention when watching at a PC (2 foot experience, immersed) vs 10 foot TV experience. It makes sense. So I get to watch funny Apple ads that I enjoy anyway, and get my content for free. And the advertisers probably get a much higher ROI than they get on TV today because I opted in.

The full article is here:
http://www.mercurynews.com//ci_8556838?IADID=Search-www.mercurynews.com-www.mercurynews.com

But here are some key quotes:

• Hulu users tend to be more engaged with what's on the screen than the average television viewer, in part because they usually sit closer to the screen and have fewer distractions. As a result, he said, users tend to come away from watching Hulu with more of an impression of the commercials than do television viewers....."It's the two-foot experience as opposed to the 10-foot experience,"
• It is experimenting with allowing users to choose which ads to view, and with showing movie trailers upfront in exchange for shows without commercial breaks.

Crossing the Chasm 2.0

A few weeks ago, I attended a presentation by Geoffrey Moore, author of ‘Crossing the Chasm’ and other books. I thought it was interesting enough to share with others. It certainly had me thinking. The main subject was ‘Web 2.0’, but it really wasn’t about Geoff giving answers, he really positioned it as some of his evolving thoughts and questions, and engaged the audience in a discussion. It was quite interactive, with lots of differing opinions as you might imagine. The presentation also covered health care and energy, which he referred to as ‘Crossing the Chasm 1.5’. But the focus was on ‘Crossing the Chasm 2.0’.

His definition of Web 2.0 was mostly about the fast growing sites that don’t necessarily have a business model, like Facebook and YouTube. The focus of a lot of the discussion was if and how Web 2.0 can be a business – how do you monetize eyeballs? He said there are really 2 chasms to cross at different times – a popularity chasm, and a monetization chasm. You must build traffic – the popularity, first. His second point (which I agree with), is that Web 2.0 properties must think beyond advertising for revenue – he believes there is an advertising bubble. The premise of his presentation was that many of the old rules don’t apply.

Personally, I agree with this premise only up to a point. I think successful businesses still need to be built upon something that buyers can not easily get somewhere else, and that they highly desire. There still needs to be a barrier to entry. True intellectual property (like a good search algorithm), or unique content can be a barrier to entry. So for example, a social networking site may have a hard time being monetized – is a network of my ‘friends’ so unique that if I had to pay for it I wouldn’t look to another social network? However, YouTube may have somewhat of a barrier to entry as there is a lot of fun and useful content there. Yes, content can be posted on other sites as well, but they have crossed the popularity chasm with content that largely is not available elsewhere, and it’s not trivial to move all of that content elsewhere. (Would the Numa Numa kid re-post somewhere else? :) ).