• by Karlene Lukovitz  @KLmarketdaily, December 13, 2019

In a smart, innovative strategy that demonstrates the power of  OTT, on-demand user data, Hulu is offering binge watchers a spoonful of sugar to help the ad messages go down.

The Disney-controlled streaming service is enabling advertisers to identify binge watchers, strategically target them with binge-relevant, minimally disruptive new ad formats, then win their gratitude by gifting them with a brand-sponsored ad-free episode or personalized offer.

Publicis Media is the exclusive agency partner, and Kellogg’s, Georgia Pacific and Maker’s Mark are the first advertisers to participate in what Hulu’s calling the industry’s “first ad experience tailored to binge watching.”

The concept, first announced during Hulu’s NewFront presentation in May, is another example of the service’s experimentation with formats designed to respect viewers’ desire for less intrusive ads, while delivering engaging, effective ad messaging.

Hulu also pioneered “pause ads” — static, on-screen ad messaging shown when the viewer pauses programming. (This week, AT&T ad-tech unit Xandr took that concept a step further, with a full-motion, no-sound, pause-ad format.)

Hulu’s focus on less irritating, more integrated binge-watching ads isn’t hard to understand: 75% of U.S. consumers say they binge-watch their favorite shows, and binge-watching accounts for nearly half of viewing hours on Hulu’s ad-supported version. Hulu defines a “binge” as watching three or more episodes in a row.

For this latest format, Hulu is using its viewer behavioral data and machine learning to predict when viewers are likely to start binge-watching a series, then serve them contextually relevant messaging.

For instance, for Georgia-Pacific’s Sparkle, messaging on screens (white titles on all-black backgrounds) at the end of the first episode state: “This is nice. Kicking back, watching some TV. We deserve this after the day we’ve had, right?” A final screen shows an image of Sparkle’s fairy mascot, along with a “Presented by Sparkle” message and “Here’s to more TV. Because more is always better.”

At the end of episode two, screen messages announce: “This episode is just what we needed right now. A good story. And a great excuse not to do the dishes.” Then a screen with the fairy and the “presented by” message concludes: “The dishes can (probably) wait. More TV!”

Prior to the start of the third episode, screen messages ask “Is it just us, or has TV brought us closer together? Let’s celebrate with this:” After a split-second pause, the final screen (again including the fairy and “presented by” message), announces: “An ad-free episode! Call it a gift from your favorite fairy.”

“The Sparkle brand is always looking to give our consumer more of what she wants, whether what she wants is more sheets on a roll or the ability to watch more of her favorite show without interruptions,” comments Jason Ippen, vice president of integrated brand-building at Georgia-Pacific.

“Our new campaign aims to share the news that Sparkle paper towels now have 200 more sheets per pack,” versus the brand’s previous “Sparkle 9 = 11” message,” he explains.

“With this message in mind, we challenged our media partners to help us find opportunities that connect to this message of ‘more of what you want.’ When Hulu approached us about the binge-ad experience, we were excited that it was not only a great fit with our campaign message, but an innovative ad product that is grounded in our consumer’s evolving media behavior.”

A similarly formatted and timed ad series for Kellogg’s Cheez-It Snap’d brand (demo video below) culminates in screens before the start of the third episode that announce: “TV and snacks pretty much go hand-in-hand. So let’s make this episode even better… presented by thin, crispy, cheesy Cheese-It Snap’d."

“Engaging with and rewarding consumers during a marathon entertainment session allows us to be an intrinsic part of this unique snacking occasion and taps into the thrill TV fans have when they’re racing through their favorite shows,” said Kellogg’s North America CMO Gail Horwood, stressing that Kellogg’s has a “laser focus” on consumer occasions, and that Snap’d “was specifically designed for munching during TV viewing.”

Maker’s Mark’s ad series also culminates in a sponsored ad-free third episode (above).

As of this past May, nearly 70% of Hulu’s 82 million total users, or about 58 million (2.9 viewers per Hulu account, on average) were on its ad-supported version.

Peter Naylor, senior vice president and head of advertising sales at Hulu, said in May that his company counts 82 million overall viewers, and added that nearly 70% of those viewers are on Hulu’s $5.99-per-month ad-supported plan. That works out to 58 million, or an average of 2.9 viewers per Hulu account.

Hulu reduced the monthly price of the AVOD service from $7.99 to $5.99 as of February 26 this year, priming the pump to accelerate new-subscriber growth and attract more advertisers and ad revenue.

The focus seems to be paying off, despite the growing number of competitive AVOD services. In March, eMarketer upped its forecast for Hulu’s ad growth between 2019 and 2020 from 11.4% to 22.7%. The researcher expects Hulu’s ad revenue to increase by 25.3% this year, to $1.82 billion; by 22.7%, to $2.24 billion in 2020; and by 20.5%, to $2.7 billion, in 2021.