This week, I am writing a three-part series about business models for online video websites. Sites are changing. Online business is changing. Video is blowing up.

It’s time we really thought about the best way to profit from creating and displaying video, while providing the best experience for the user.

Let’s get to it.

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What’s A Hulu Subscription Look Like?

In recent days, Hulu – the NBC/Fox/ABC-backed video site – released and then recanted news that it intended to charge for service via News Corp. Deputy Chairman Chase Carey.

Carey said that Hulu would need to incorporate a “meaningful subscription model as part of its business.” But he didn’t go into any more detail than that.

Most pundits assumed this meant a firewall-blocked subscription model in the works – a slightly backwards-looking model that succeeds best in scarcity: scarcity of quality content and scarcity in access.

But we don’t live in that world anymore. The online channel has tons of quality content and most content creators/publishers are tripping over themselves to provide online access to their work.

The old version of a subscription model would be met with great hostility considering 1) there is no lack of free video content online and 2) it reeks of a bait-and-switch to start charging for something that had already been totally free.

So how can Hulu make money?

The New Creativity

I had already been thinking about this in my review of old business models (easily or not-so-easily) moving into the digital space. I detailed the changing business models in my post Why The New Creativity Changes Everything.

I advocated what Joseph Jaffe dubbed “The New Creativity” in The Beancast episode #76 around minutes 37-38. The short version is this:

• The old creativity was centered around innovative ways that advertisers and marketers could loudly/rudely/creatively interrupt a consumer’s day in order to push their brand message.
• The new creativity requires that the advertiser or marketer create an experience so compelling that consumers share it amongst their peer groups.

So, instead of a one-way marketer-to-consumer system, we now have a system where marketers try to influence the influencers, while also realizing that they are in a dialogue with all consumers and potential consumers as well.

Sounds simple, right? It helps explain why we’ve seen the boom in things like social media marketing and the downward trend in direct marketing and TV/radio ads.

The “Freemium” Option

If Hulu is to succeed, especially when in direct competition to Google-owned YouTube, it needs to be nimble and creative. They need to think beyond non-contextual ads and firewalled content.

Largely embraced by social networking sites, a freemium business model hasn’t been adopted by many larger, more traditional companies. But it has the potential to provide a great customer experience and differentiate Hulu from well-known competitors.

A recent eMarketer study reported on an Abrams Research survey in which social media leaders were asked the best way to monetize social media (note: it doesn’t say how they determined who was a “social media leader,” but just go with me for a second).

The most popular answer? 45.5% of respondents answered that a freemium model would be most profitable – more than double the next most popular response.

Chris Anderson defines a freemium business model in The Long Tail:

“Already, one of the most common business models on the Internet…is to attract lots of users with a free service and convince some of them to upgrade to a subscription-based ‘premium’ one that adds higher quality or better features.”

It is roughly a business where most of the basic services are free, but a percentage of uses pay for more/better/quicker elements of that basic package.

Flickr is a common example. Anyone in the world can start an account and upload 100MB of photos and 2 videos per month. This satisfies a great (happy) majority. However, a “Pro” account provides unlimited uploads, archiving, high-res options, and expanded groups.

The key is that the paying customers – the committed 10% let’s say – cover the cost of the 90% using a basic service for free.

A freemium model isn’t for every business. It favors businesses that are tech-centric, start-up/new, agile, and almost exclusively offering an online service. But what model could be more perfect for the era of social networks?

Let’s See It In Action

Tomorrow, I will outline seven ways Hulu could package technology they already have into a freemium model users would willing pay for (heck, I sure would).

Sites like Hulu, facing competition from Google and a number of start-ups, will need to be nimble and smart. I hope you join us tomorrow to gauge for yourself whether my suggestions would be worthwhile for sites like Hulu.

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(Image courtesy of (A3R) angelrravelor (A3R) via Flickr)

I saw this 5 hour energy commercial a couple weeks ago and can’t stop thinking about it. It illustrates a trend I’ve noticed, but I am curious if you have too.

The commercial spoofs the type of young, skateboarding, scruffy-haired, Jeff Spicoli meets Sean White meets Andrew WK soda drinkers. 5 hour energy makes a convincing case by being the staid older brother – more able to make a smart decision about his choice of beverage.

It made me think – is marketing finding a better ROI by toning down the rhetoric? Are they gaining by using logic instead of screaming?

I don’t know if you’ve watched Ideocracy lately, but Brawndo seems even more ridiculous than it did a few years ago. It was always a parody, but now it feel like a parody beyond its time.

Maybe it’s the recession. Maybe it’s a move from TV to online. Maybe people just got sick of commercial pitchmen who sounded like drag racing promoters (Sunday, Sunday, Sunday!).

Do you agree that marketing is starting to tone it down?

Let’s take a less adrenalin-prone product than energy drinks. Perhaps the most mundane is toothpaste.

I noticed a change in toothpaste packaging as well. A few years ago, it was all about which one could make your teeth the whitest. It was about the surficial beauty, the EXTREME clean.

Have you seen the way toothpaste is marketed today? The design colors are much cooler. They’ve swapped “extreme” for “total.” There is an emphasis on health, rather than beauty. Check it out:

Am I just creating patterns where none exist or are we seeing a shift in priorities? Is volume of message being replaced by quality of message? I have no scientific studies to back this up; it’s just something I’ve been noticing and wondering if you have as well.

I’d love to hear your thoughts on the subject. Feel free to use the comment area below to share your thoughts with the community.

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Marketing During A Recession: Economic Slowdowns Are Opportunities (PDF)

We’re all worried about how the recession will effect us and our business. But there are a lot of misconceptions and downright mistakes about how to use marketing during this recession. This e-book draws from expert advice and provides you a path forward in these difficult times.

Please download it or check it out on SlideShare. (It’s free, of course.)

I got some great help from Joann Sondy, a designer in the online community – she’s the reason this e-book looks so much better than my previous ones. She was great to work with and knew the best design strategy for this particular material.

Consider hiring Joann for your next project. You can check out her portfolio at CreativeAces.com (seriously, have your annual reports ever looked this good?) and read her blog at OutsideTheMargin.biz. Some more information about her work is below:

Joann Sondy has an extensive background creating and delivering corporate materials for financial and investor relations. With more than 15 years, Joann has produced distinctive communications that help IR/PR agencies build audience awareness and confidence. If your strategy calls for a presentation, e-book, white paper, fact sheet and/or annual report, contact Joann today. joann{at}creativeaces{dot}dom or DM her via Twitter: @jsondy.

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I was figuratively punched in the gut by one part of Joshua Ferris’ And Then We Came To The End, a book I highly recommend to anyone already in or considering a job in advertising or marketing.

Several characters in the book are copywriters, a title that has been present on my business cards, from time to time. Copywriters aren’t just characters in the book, they’re often characters, themselves.

Copywriters are often an interesting group. Well-read, imaginative, delightful at cocktail parties – it’s practically written into the job description.

Baby, You’re A Killer

And maybe it’s imagination that allows us to create personas about ourselves. We are people who sit in offices, but frequently imagine ourselves as much, much more.

Consider this excerpt from Ferris’ novel:

“‘What’s your idea?’ asked Joe.

Her idea? We’ll tell you her idea, Joe. To slaughter. Nobody talks about it, nobody says a word, but the real engine running the [advertising agency] is the primal desire to kill. To be the best ad person in the building, to inspire jealousy, to defeat all the rest. The threat of layoffs just made it a more efficient machine [page 109].”

Writers as killers? It might seem like a stretch, but consider this from On Advertising by David Ogilvy, father of one of the most successful advertising agencies ever and constant advocate of good copywriters:

“‘Most good copywriters’ says William Maynard of the Bates agency, ‘fall into two categories. Poets. And killers. Poets see an ad as an end. Killers as a means to an end.’ If you are both killer and poet, you get rich [page 32].”

Now, we’re killers and poets? And we still wear ties?

Or Really Just Nerds?

And yet, something struck me about this quote from Almost Famous in which two writers are discussing their place in the world:

Lester Bangs: They make you feel cool. And hey. I met you. You are not cool.

William Miller: I know. Even when I thought I was, I knew I wasn’t.

Lester Bangs: That’s because we’re uncool. And while women will always be a problem for us, most of the great art in the world is about that very same problem. Good-looking people don’t have any spine. Their art never lasts. They get the girls, but we’re smarter. …The only true currency in this bankrupt world is what we share with someone else when we’re uncool.

So Which Is It?

Personally, I can see all of them. Advertising and marketing agencies are highly creative, highly political, highly charged environments. So it’s understandable to put yourself in any of these roles (sometimes all of them in a single day!).

What do you think? Which is most accurate metaphor for copywriters? Is it killer, poet, nerd, or something else? I anticipate your answers in the comments section below.

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(Image courtesy of jbhill via Flickr)

As you’ve probably read, I am reporting on social media engagement during Super Bowl 43. Here are the results from the first half. Let’s get right into the second half here:

• Coke (Avatars): No engagement
• Bridgestone (Jump around): URL (Bridgestone.com) – very small font
• Denny’s (Serious Breakfast): No engagement
• Monster.com (Moose head): URL (Monster.com)
• Budweiser (Jake): No engagement
• Race To Witch Mountain (Movie trailer): URL (Disney.com/WitchMountain)
• Transformers 2 (Movie trailer): URL
• Careerbuilder (Hate your job): URL (Careerbuilder.com)
• Coke (Nature): No engagement
• Kellogg’s (Frosted Flakes): URL, vote where they donate money at FrostedFlakes.com
• NFL (Usama): URL, NFL.com/SuperAd
• Heineken (This is a sword): No engagement

Fourth quarter:

• Hyundai (Assurance): URL, HyandaiUSA.com
• Coke Zero (Joe Green parady): No engagement
• Cash4Gold.com (Hammer): URL, Cash4Gold.com
• Vizio (Blue): URL, Vizio.com for big event
• Taco Bell (Call me): No engagement
• GE (Scarecrow): URL, ecomagination.com
• Hulu (Alec Baldwin): URL, Hulu.com
  
• GE (Wind energy): URL, ecomagination.com
• Pepsi (MacGruver): No engagement shown in ad, but @Pepsuber Twitter account
• Bud Lime (Summer): No engagement
• GoDaddy (Court): URL, GoDaddy.com, ad continued online

So what do you think? Will customers continue to interact with these brands after the big game? Was $3M per commercial worth it?

My Take

I’m shocked at the percentage of advertisers who shelled out $3M for a 30-second spot, but didn’t even list a URL. Advertisers paid that much to get into America’s living rooms, but did not take the opportunity to enter it again.

Despite my high hopes, this year’s Super Bowl was not the stellar social media outing it could have been. Out of the 54 commercials shown during the actual game (kick-off to end of game), 17 had no online engagement at all – not even a URL. Almost one-third – 31.48% – planned for no interaction with their customers after the game.

Rick Liebling at eyecube has a great idea about other ways to spend that money. I think brands would be better off if their marketing departments cared more about creating brand advocates like Rick mentions, rather than a quick one-off during the big game.

I’d love to hear what you think. Which advertisers do you think used their 30 seconds to create a conversation with their customers? Whose conversation will continue in the coming weeks and months?

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