Hulu may offer ad-free TV, for a price

Adriene Hill Jul 17, 2015
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Hulu may offer ad-free TV, for a price

Adriene Hill Jul 17, 2015
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Anyone who subscribes to Hulu knows it never met an ad it didn’t love. Its shows are crawling with them.  

“Too much ad clutter makes some people say, ‘I don’t want to be exposed to all these ads,’ and they go to a competitor,” says Thales Teixeira, associate professor of marketing at Harvard Business School.

That’s  a challenge for services like Hulu, because the ad-free-TV competition is growing: Netflix, Amazon and HBO, even YouTube, is working on a paid, ad-free model.

That’s also one reason the streaming service may consider a new no-ad tier, which is more expensive than its current $7.99 monthly fee for the top service. 

But all this buy-your-way-out-of-advertising poses a problem for traditional advertisers.

“The people you are losing through opting out are some of the most valuable customers,” says Lars Perner, an assistant professor at the USC Marshall School of Business.

People who have extra income. People in the market for say, a Lexus, or an expensive new gadget.

Steve Kazanjian, head of the television marketing organization PromaxBDA, isn’t worried.

“You will be able to buy your way out of a 30 second spot, but you will never be able to buy your way out of being marketed to,” he says.

Kazanjian says marketers are getting smarter about targeting ads and making them more relevant. 

They’re working on making their brands part of the show. And the data you turn over when you opt out: they can use that too, to get a better idea of how to market to you somewhere else.  

 

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