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Hulu Subscription Tier Spotlights New Ad Tech

Hulu’s announcement Wednesday that it has launched a $11.99 “ad-free” subscription tier, actually highlights the importance of technologies that are playing a major role in transforming the way content and ads are delivered to consumers.

The notion that a move to offer a series with little or no advertising might have anything to do with advertising seems counter-intuitive until this announcement is pared the Aug. 25 Hulu blog (opens in new tab) about programmatic advertising.

That blog noted that Hulu would be working with the Oracle Data Management Platform and the programmatic ad tech company LiveRail, which is owned by Facebook, to offer programmatic ad sales options this fall.

In that blog, Peter Naylor, senior VP of advertising at Hulu, rightly argued that “the marketplace has shown that data is overwhelmingly the new currency.”

That’s because, the data from the Oracle DMP will allow the LiveRail platform to delivery very targeted ads based on the user’s profile. That type of targeting, which is common in the digital world, promises to deliver better results for advertisers and in theory allow programmers to charge higher rates.

“With the Oracle DMP, marketers are able to personalize their advertising campaigns on Hulu with more rich information about their target audiences to deliver even stronger campaign results,” Hulu argued in the post.

Those higher rates could allow Hulu to continue to offer a reduced ad load on its existing ad-supported tiers.

Using a programmatic platform would also automate at least some of the sales, making it less costly to deliver the spots.

But these technologies will also impact the supposedly ad-free tier. Better data is already the cornerstone of all successful OTT offerings, with Netflix and others using it to better target its offering and even program new content.

At Hulu, existing rights deals mean that some shows will have short ads. Over the longer term, those ads could be delivered more efficiently by the programmatic platform and data from the Oracle data platform that Hulu selected in May.

The flexibility to better target ads and programming by OTT players like Hulu also makes these technologies increasingly important for TV players.

Three of the technologies involved in that effort—automated programmatic ad platforms, data mining and personalized content delivery based on the data—will be a major focus of attention at next month’s IBC2015 in Amsterdam.

Faced with a slumping ad market, programmers have been touting “big data” analytics to show why TV and digital ads are valuable.

Over time, programmers like Viacom, Turner and Disney/ABC are also working to transform their infrastructures by adopting IP- and cloud-based infrastructures that will allow them to better target advertising and personalize the content they’re delivering into the home, much as their OTT competitors are already doing.

How quick this can happen is an open question but some expect major advances in the next two to three years.

You’ll find more on this in next week’s pre-IBC coverage in B&C.