• by Wayne Friedman , Staff Writer, March 2, 2011

For all its problems, Hulu now says it will reach $500 million in combined advertising and subscription revenue this year -- nearly double its $263 million revenue take in 2010. CEO Jason Kilar said Hulu now has 627 advertisers and 250 content partners. That's big growth from three years ago when the site launched with a dozen advertisers and two content partners.

Hulu still gets nearly all its revenues from ad sales. Though not an exact comparison, the CW broadcast network doesn't reach $500 million in advertising sales during the upfront process. And a number of cable networks don't reach t$500 million for an entire season -- even after many years of operation.

A typical broadcast network might have 1,000 advertisers in a given year, with about 300 of those doing upfront multi-million-dollar deals. Hulu's 627 advertisers aren't on this level but given its short history, that's not bad.

Good news for Hulu is that pre-roll continues to deliver the best results of any digital video format, according to many digital video ad executives. Hulu benefits from mid-roll and post-roll advertising as well.

While Hulu still has the cool spin of a new technology among consumers, much of its optimism is due to spillover from a still-tight traditional TV scatter market. Traditionally, second quarter scatter sales -- which just started - have been a bell-weather indicator of the upcoming upfront. That always brings a smile to broadcast and cable networks, and increasingly to digital video sites like Hulu.

Helping all this is that viewers are becoming more accustomed to time-shifted viewing with DVRs, and finding sites like Hulu easier to use. Despite many questions remaining for digital video advertisers, more of them are making the leap of faith.

The big question mark for Hulu isn't video advertisers, but traditional TV companies, many of which co-own Hulu. Kilar apparently put his foot in his mouth a little while back when he blogged: "Traditional TV has too many ads. Users have demonstrated that they will go to great lengths to avoid the advertising load that traditional TV places upon them."

Well, he's right. And even traditional TV ad executives might agree with him. Clutter has been a problem for decades. Kilar, during the recent IAB Leadership meeting, elaborated on his somewhat controversial remarks. While networks are indeed a platform for program distribution, he noted that they are also big content owners. We know. Go talk to Steven Levitan of "Modern Family" for this perspective.

It's always been a dual-edged sword. Hulu's owners want to grow their business, but in part that growth may come -- at least initially -- from their existing advertising business. In an agnostic video world, the bigger picture is that everyone wants to get more money for their TV programs. In some cases, that's what indeed is happening.