Guest Post: Hulu vs YouTube

This is a guest post by Eric Franchi from the Undertone ad network:

An analyst at Screen Digest predicts that YouTube will generate U.S. revenues of $100 million vs. Hulu’s $70 million in 2008. Next year, however, Hulu is predicted to nearly triple revenues and tie YouTube’s projected $180 million. On the surface, that is impressive. But when you dig into it, it is downright outstanding: Hulu is nearly one-tenth the size of YouTube in U.S. unique users.

You have to give YouTube credit: they are being as aggressive as ever with trying new strategies and ad formats. This likely comes from their new head of monetization, ex-Facebook executive Ben Ling. But the core difficulty they face - a lack of quality, professional content - is Hulu’s strength. Hulu can stay focused on building audience and adding content while YouTube is distracted by growing hardware costs and legal fees. At the same time, YouTube has the resources of Google, which is clearly committed to finding a winning formula for online video. And that’s a good thing for YouTube, since they have to blaze a new path - monetizing a site that has thus far had traction with any format tested. My guess is that they’ll see some success leveraging search and search data and less with a new breakthrough ad unit

How can Hulu continue their momentum? By staying on their path. Hulu aligns marketers with some of the best shows and movies of all time while providing them a platform to get their message across using sight/sound/motion. The ad opportunities themselves are fairly standard so any breakthroughs would likely come via experimentation with new units along with time and engagement analysis. They are amassing so much data - is a :05 spot better than a :15 when the video time is 3 minutes or less, for example - hopefully they’ll use it and combine it with some kind of content and user targeting.

This is going to be interesting to watch, since the site content is so different. It is likely that they will both hit upon successful formulas but will they be similar in strategy? Too early to tell, but based on the different business models, I’m going to predict not.