Hulu Receives Good News Concerning Their Online Ad Format

paidContent has two pieces of good news for Hulu in the past week—they’re commanding not only 10% of the online video ad market.Bloomberg report, paidContent shows that, for some shows, CPMs on Hulu are actually greater than they are for broadcast TV. And when I say broadcast TV, we’re talking primetime, new episode, time-slot-leading network television. (None of that cable syndicated rerun stuff!) Bloomberg’s example:

Marketers typically pay $20 to $40 per thousand viewers for a prime-time ad. On Hulu, which began offering shows to the public in March 2008, an ad on the animated series “The Simpsons” costs $60 per thousand viewers, Michael Nathanson, an analyst at Sanford C. Bernstein & Co. wrote in a June 18 report.

How can the Internet, with demonstrably fewer viewers (another example, the NCAA basketball championship game, drew 17.6M TV viewers and 7.52 Internet viewers), command such high CPMs?

A couple factors: first, that the Internet is so measurable. As CBS’s chief research officer put it:

“The reason people are paying such a high premium for these ads on the Internet is they do have a captive audience,” Poltrack said. “You know you have eyes on the screen.”

Plus, Bloomberg says, there’s an extremely scarce inventory. A typical Simpsons episode on Hulu carries only 37 seconds of advertising, versus nine minutes on television. But that also means that their overall revenues per-episode are far lower, even with more dedicated viewers. Many analysts and networks worry about television companies “cannibalizing their core business.” But maybe their core business should be shifting online.

Justifying those high CPMs, Hulu commands 10% of the online video advertising market place.

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