• by Wayne Friedman , October 11, 2019

Hulu will be shifting to a less complicated “first-price” auction process when it comes to selling premium video inventory for its private biddable marketplace launched earlier this year.

The shift simply means media deals going to the highest bidder. Notices recently were sent out to clients; the new changes take effect October 14th.

Digital media platforms have increasingly shifted to first-price auction from second-price bidding because many media executives believe the latter doesn’t necessarily reflect the actual value of the inventory.

Second-price auctions are where a winning bidder pays $0.01 above the second-highest bid in the auction. So if a winning bidder bids $4.00 and the second-highest bidder bids $3.00, the winner pays $3.01. With first-price bidding, the winning bidder pays $4.00.

A Hulu note sent to clients reportedly said: "We are cutting down on complicated rules, increasing transparency in the value exchange and giving advertisers even more control over their buys."

There are three different ways of buying Hulu advanced TV video inventory. Two are non-biddable -- automated price/inventory guaranteed, and non-guaranteed, unreserved inventory at fixed rate.  

The latest was started in January of this year -- a private, biddable invite-only marketplace for DSPs or agency trading desks.  

Advertisers can also buy directly, a more traditional TV selling approach via Hulu ad sales executives. But marketers can’t buy specific programs. Rather, Hulu ad executives can sell by genres, or by specific audiences.

In addition, inventory can be sold via Hulu’s traditional TV network partners -- ABC, NBC or Fox, for example -- who typically can sell current-season inventory of their respective original shows in scatter or upfront TV deals.

 eMarketer estimates that Hulu’s advertising revenues will climb 25% this year to $1.82 billion, 23% in 2020 to $2.24 billion, and 21% to $2.7 billion in 2021.