Dive Brief:

• Hulu will limit ad interruptions on the video streaming platform to 90 seconds, effectively removing more than half of the commercial time that had previously run in its programming, Ad Age reported. 
• Before the new limits, ad breaks on Hulu could range from 90 seconds or less to up to 240 seconds, with some shows running three ads in a row and others six. Hulu has reportedly been enforcing the 90-second cap since the start of the year, but recently informed the networks it works with, including NBC, Fox, Turner and Viacom, which have been able to mostly control their own ad experiences on the platform.
• Questions surround how networks will respond to other possible changes on Hulu, which is majority owned by Disney, after it acquired 21st Century Fox. Disney said it will invest in Hulu, and the platform could be home for Fox programming and content not family-focused enough for its forthcoming OTT service Disney Plus, according to Ad Age.

Dive Insight:

Consumers find lengthy blocks of ads annoying and disruptive, and Hulu clearly sees capping its commercial breaks as a way to pull in viewers and stand out in the fiercely competitive video streaming market, where other streaming services, like Netflix and Amazon Prime, don't feature commercials. Improving user experience on the platform is part of Hulu's efforts to expand its subscriber base, which now totals 25 million, according to Ad Age.

To attract advertisers, Hulu plans to unveil new ad products and programming at its newfronts presentation in May. Hulu is piloting a new ad format called "pause ads" with brands like Coca-Cola and Procter & Gamble's Charmin, and the format will likely be rolled out in Q2 of this year. The pause ads activate five seconds after users hit the pause button, are static, contain short messages and small images, and appear on a translucent background so that the viewing content remains visible.

The company has also reportedly been testing performance-based measurements to help brands understand how many consumers purchased a product, downloaded an app or signed up for additional information after seeing an ad on Hulu. The new product will match advertisers' customer relationship management data to its own campaign exposure data, enabling Hulu to offer advertisers more granular data on the viewers watching ad-supported content.

Separately, Hulu has seen success with a recent partnership with Spotify, offering both services for $10 (and $5 for college students). More users led to increased ad inventory, even with the cap during individual programs. This may be good news for marketers, as it could drive down ad pricing. Marketers are looking to invest in over-the-top (OTT), like Hulu, as viewership grows. OTT ad spend is expected to rise 40% to $2 billion 2018, according to Magna. Hulu has been known for high ad prices, with spots cost $30 to $40 per thousand views, but some advertisers have seen prices drop to $20 recently, per Ad Age.