Web Video Redefines Itself as TV to Win Bigger Slice of Ad Pie

  • Hulu, Crackle changed name of annual event to `upfront'
  • `The actual TV is a huge priority' for Google's YouTube

With their sights set on a $63 billion TV advertising market, streaming-video services like Hulu and Crackle are now defining themselves as TV networks, arguing they’re just as prevalent in the living room as ESPN and MTV.

The television screen is a big theme this spring in New York as online video distributors make their annual pitches to advertisers. They’re not just differentiating themselves from cable and network TV by playing up their younger viewers, a demographic coveted by advertisers. They’re also emphasizing a common thread that binds new and old media: the television set.

Hulu and Crackle each changed the name of their events from “NewFront” to “Upfront” -- the name used by traditional TV networks -- to highlight how much they’re seen on an actual television in consumers’ homes. The move vaults them into a more lucrative ad-buying market than Web streaming, which generates about $10 billion a year in sales.

“It helps them tap into the television spend because they are operating very much like television now,” said Dave Campanelli, director of national broadcast at Horizon Media, an ad buyer. “Before you had a bucket here for TV and another for online video. This makes the bucket bigger.”

To be sure, TV networks still sell a lot of commercials. Last week, media companies including Time Warner Inc., CBS Corp. and Discovery Communications Inc. reported increases in ad sales and predicted that the current upfront season -- when ad buyers spend about 70 percent of their annual budgets -- will be more lucrative than last year. And while traditional TV viewership is down, advertisers still buy spots to reach a mass audience.

But advertisers have more than doubled their investment in original Web video in the past two years, according to the Interactive Advertising Bureau. Magna Global, an ad buyer for Coca-Cola Co., Johnson & Johnson and other big advertisers, will shift $250 million in spending from TV to YouTube over the next year, partly because Web video better targets consumers.

‘TV Network’

Crackle, home of movies and Jerry Seinfeld’s Web series “Comedians in Cars Getting Coffee,” last month struck a deal to be carried on Comcast Corp.’s set-top boxes. Crackle also hired a company called Moat to verify that ads are actually being watched -- a big concern about Web video among advertisers.

“We are a TV network,” said Eric Berger, general manager of Crackle, which is owned by Sony Pictures Television.

Hulu, an early pioneer of Web video streaming, is also making more inroads in the living room. About 70 percent of Hulu’s streams are now being watched on a TV via connected devices like a Roku or Apple TV and smart TVs, up from 50 percent in 2014.

Much of Hulu’s programming was once on TV, like “Broad City” and “Seinfeld.” Co-owned by 21st Century Fox Inc., Walt Disney Co.’s ABC and Comcast’s NBCUniversal, Hulu is making big-budget original series like “11/22/63” and “The Path” that rival traditional TV programming. It’s also looking to create its own cable-like TV service.

Hulu helped create “Digital Content Newfronts” in 2008, and will continue to host a presentation for advertisers during that event. But the company is casting itself more and more as a TV network.

“Our strength is that we’re TV,” said Peter Naylor, Hulu’s head of ad sales. “I’m competing with broadcasting and cable for transactions in the marketplace.”

Even YouTube, the world’s most popular video-streaming site, is looking to TV sets for growth.

“The actual TV is a huge priority for us,” said Tara Walpert Levy, Google’s managing director of agency solutions in the Americas. “Video will be 90 percent of global Internet traffic by 2019, and the consumption of digital video will happen through connected TVs and devices that power them.”

At the same time, advertisers are looking to Web video for help reaching audiences as TV viewership declines, especially among younger viewers, said Campanelli, the Horizon Media ad buyer.

“With ratings down, TV buyers need alternatives that look and feel like TV to spend our dollars so we’re not stuck buying the same four networks that are trying to charge too much money,” Campanelli said. “So if we have alternatives, that’s a good thing.”