Week In Review: Hulu Reduces Ad Breaks, Apple Reduces Expectations

1. Hulu Reduces Ad Breaks

Hulu has quietly been reducing the size of its ad pods by at 50% or more, limiting them to just 90 seconds, versus as much as 240 seconds (a minute and a half down from four minutes, if you don’t want to do the math)

Why It Matters

Hulu’s ad pods used to be more random and were often based on what the various networks wanted. But no more. Now ad pods will be standardized and last no more than 90 seconds.

That has several benefits beyond the obvious one of not making ad breaks seem onerous especially when compared with traditional network TV.

That’s what’s in it for consumers.

For advertisers, there’s the huge added benefit of ensuring that their ad isn’t buried within a four or five minute block sandwiched in between two DTC pharma ads, those minute-long monstrosities that force viewers to think about death and dying and explosive diarrhea.

So there’s that.

There’s also the fact that shorter ad breaks make for better experiences. The old canard that viewers use ad breaks to run to the kitchen for more snacks, check their phones or use the bathroom is just that—an old canard. In the age of streaming, viewers can just hit “pause” when they need to take a break.

There’s also No Channel Flipping Syndrome. In the new world of digital, viewers can’t flip from channel to channel—the systems just aren’t designed that way. So they’re quite likely to stay put during the commercial break and, if that break is only 90 seconds, there's also a strong chance they'll actually pay attention to the commercials.

What You Need To Do About It

If you’re a brand, you need to make sure your commercials are actually, you know, good. Because creative is going to start mattering again now that people are paying attention. An entertaining ad is going to get you a lot more traction—people don’t hate ads, they just hate bad ads. So start cracking the whip on your creative agency and open your mind to fresh ideas.

If you’re a traditional network, you may want to give a little more urgency to your own ad cutting plans. Taking 10% off of the 16 minutes of commercials you run each hour isn’t going to be noticeable. But lop 10 minutes off and people will most definitely see a change.

Pro Tip: Brands have realized that nothing gives them the reach or the emotional connection of TV. People remember ads they saw as kids, whereas no one remembers a banner ad they saw ten minutes ago. In other words, you really can charge more for smaller ad loads because, as we learned in Economics 101, when demand remains constant and supply shrinks, prices will go up.

2. Apple Reduces Expectations

Apple introduced its new TV app this week in a presentation that garnered way more attention for the launch of a no-fee credit card that will live on your iPhone.

Why It Matters

A lot of the underwhelm was due to the fact that Apple left more questions unanswered than answered (see our Top 25 here) or that what was introduced didn’t seem all that revolutionary. Especially as it was far more likely to live on a Roku or Amazon Fire TV and both of those companies have a vested interest in Apple failing.

So there’s that and the fact that this just seems like HomePod 2.0, a me-too product that doesn’t really offer a whole lot of what anyone wants.

That's super important, because once the Flixcopalypse hits, most of what people are watching will likely be on platforms that are not available via the Apple TV interface. Because why would Disney or NBCU or Warner agree to share anything with Apple?

There’s also the fact that Apple is pinning a lot of its hopes on the fact that its platform offers viewers privacy protection as it won't sell their viewing data to marketers.

That sounds good on paper, but our research on our ACR and Ad-Supported OTT reports indicated that most people (a) don’t care that anyone knows what TV shows they watch and (b) are frequently happy to have that data shared, as it means they’re going to see more relevant ads. The key to part (b) is keeping the ads relevant rather than stalkery and creepy, but if the industry can do that, privacy concerns may not really be all that much of an issue.

What You Need To Do About It

Not much to do at this point but get out the popcorn and wait.

Key things to look for are how Apple’s new shows are received, whether any of the new Flixes play ball with Apple's TV app, and how badly Roku and Amazon cripple that TV app.