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Hulu to Catch YouTube in Advertising Spend: Screen Digest

One-year-old Hulu is likely to give YouTube a run for its money in terms of advertising revenue in 2009. If it happens, it may serve as a warning to other social networking sites just how difficult it is to generate revenue from amateur content. Hulu’s content is made up of professional TV shows and movies.

Digital media research group Screen Digest says that Hulu’s ad revenue is growing more quickly than YouTube’s; in 2008, YouTube is expected to generate about $100 million in the U.S., compared with $70 million at Hulu, but next year both are expected to pull about $180 million in the U.S., writes the Financial Times.

Arash Amel, analyst at Screen Digest, says that YouTube is in a difficult position. In the next 18 months, it should become clear whether Google’s $1.65 billion acquisition of the site was “just an expensive mistake.” Advertisers prefer to spend their money with well-known brands,” says Tracey Scheppach, video innovations director at Starcom.

While beginning to catch up in advertising revenue, Hulu is significantly behind YouTube in terms of unique visitors, with 6 million uniques in the U.S. in September, compared to 83 million for YouTube (per Nielsen).

YouTube makes about half its revenues in the U.S.; Hulu has not yet launched outside of the U.S.

Last week, YouTube announced the addition of sponsored search ads. Advertisers can bid to promote themselves via YouTube Sponsored Videos; the ad results appear on the right-hand side of the YouTube search results with a small image and some text. Earlier this month, YouTube also announced that MGM was making some full-length movies available via a couple of channels on the site, while CBS began offering full shows on YouTube last month. The addition of such professional content is YouTube’s latest move to position itself as a force in the commercial online video space, Wired writes.