In an increasingly crowded streaming market, Hulu is counting on superior content and personalized on-platform experiences to drive brand preference. Scott Donaton, SVP Marketing at Hulu, spoke to WARC’s Anna Hamill at Cannes Lions.

Which consumer behavior changes or new expectations have most affected your brand over the last few years? What do you think will be permanent?

It’s probably the primary question on our minds right now. I tell my team every day that we just can’t assume anything about our audience’s behavior anymore. Hulu is 14 years old – we’re a very data-driven company and we know so much about our audience, but I think we have to challenge ourselves every day now on what we think we know and whether it still holds true.

We have very sophisticated models that are based on historical data, and there are things happening right now that don’t have historical precedents. What happens is that you constantly learn, and then you figure it out. If something happens that surprises you, you go ‘there’s something that we didn’t account for in the model, what is it’?

Can you give me an example of one of those things you’re adapting to?

There are indicators of when someone might be at risk of churning as a subscriber, for example. Historically, we knew that if we started seeing these two changes in your behavior, you might be at risk and getting ready to possibly drop the subscription. During the pandemic, we’d suddenly see those two things happen, but then you didn’t go away, so it’s a good thing.

But it was also the first sign of thinking ‘well, that’s no longer true, then what else is no longer true’? It’s a very healthy exercise for us to go through, as much as it can be a little scary to say that. When we challenge ourselves on everything we think we know, probably 85% of that still holds true, but it’s figuring out the 15% that may not that will figure out how behaviors are changing and how we need to change or innovate in response to that.

The pandemic accelerated, in the short term, people watching a lot more. When it first happened, we thought that was going to be a temporary thing. The first few weeks [of COVID] was like ‘okay, this will last a few weeks, and then it’ll go away’. Obviously, it lasted a lot longer. What it really did was put a rocket booster under the penetration of streaming and the maturation of streaming as a consumer behavior. It’s embedded in people’s lives now.

Do you think that the pandemic accelerated that much more than it would have otherwise?

Absolutely. I think it probably took a couple of years off the timetable in the embedding of streaming in people’s lives. That’s the main thing that happened. Coming out of it, I think what’s interesting now is that we now have more competitors than we’ve ever had in the marketplace... I think that’s healthy and that keeps us on our toes.

As we come out of the pandemic, and as Hulu is in this market with a lot more competition, we have to have a place in our audience’s lives every single day. That’s just something we have to be very vigilant about, i.e., are we relevant to you right now? Are we helping you find your favorite show now?

It sounds as though staying close to consumer insights is a big part of your business success.

It is. We’re fortunate as a direct-to-consumer business to have a direct relationship with our audiences, and to be able to see and react to what they do in real time. That’s constant, even just in terms of the on-platform experience, i.e., if you’re watching Hulu, what you respond to or don’t depending on where it is on the homepage, which piece of key art gets more people to start playing something versus another, recommendations… we’re constantly learning, and constantly iterating. It’s really a mix of human curation and machine learning.

A lot of streaming platforms offer similar experiences. How do you ensure that your customer experience is better than your competitors’ as a point of differentiation?

Part of it is fairly simple: do you have shows that people want to watch? It’s what our entire business ultimately boils down to.

We’re a very sophisticated and complex marketing organization, data organization and technology organization. Yet it really all boils down to the content… that is ultimately the number one reason people subscribe or don’t renew. Once you’re in the experience, I think it is about creating a personalized experience. It’s not about how [the brand] defines yourself versus competitors, it’s about how you show up to each individual person. If we have 40+ million subscribers on Hulu, not one of them has the same homepage.

The most important thing is to make sure that people are having the best experience through algorithms and human curation that they can have. At the end of the day, what you’re really just doing is taking as many barriers as possible out of the way between people and their favorite shows.

How do you discern what is right when it comes to marketing investment from a brand building and a performance perspective?

If you’re talking about performance media, a lot of that comes down to efficiency and really looking at the science. We have a very sophisticated marketing-mix model that we use that basically tells us the most efficient way to find incremental subscribers. Ultimately, it’s the cost per acquisition of those subscribers which is going to drive the decisions on where to spend the money. It’s a very ruthless model in that regard.

It sounds like a relatively simple decision-making process, despite the complexity.

It ultimately boils down to the money. And in real time, we can move that money around to the things that give greater support to things that are driving results and pull back from things that aren’t.

When it comes to the brand marketing budget, it’s different KPIs, because you’re not looking at it as solely an acquisition. You want it to make sense in terms of efficiency from an acquisition standpoint, but you’re really looking at other measures of success which are, primarily for us, consideration for non-subscribers and preference for subscribers.

You can talk about awareness and you can talk about net promoter scores but for us, if you don’t subscribe, how do we drive consideration, intent and ultimately action? And if you do subscribe, how do we make sure that Hulu is the first app that you open when you go to look for what you want to watch… Can we get to the point where most of what you want to watch is on Hulu?

That’s what our brand advertising does. Because you’re holding it to those KPIs, you’re often able to be more innovative and a little more qualitative in the decisions about where and how to spend that money.

When it comes to the skills and expertise required by you and your marketing team on a day to day basis, what have been the biggest changes over the last five years?

There are some basics that are never going to go away: do you understand what good brand marketing looks like? Do you understand – if you’re a creative – how to use innovation and creativity to solve business challenges? The sophistication of performance media – for the marketers that work in subscriber acquisition, engagement, retention – and the tools that are available to them from a technology standpoint, the data that’s available to them, and how they can turn that into actionable insights that drive our business.

I think we’re hiring people with a lot more sophisticated skills, or if they’re already internal, they’re developing a lot more sophisticated skills around those areas. On the creative side, creative technologists are using technology to create and share and tell stories in new ways. That involves thinking beyond trailers, key art and 30 second spots from a brand campaign perspective to better connect with audiences.

How are you thinking about responding to the coming recession? A lot of people are cutting their discretionary spend. Are you factoring that into your thinking around the next six to 12 months?

We definitely can’t ignore the macroeconomic trends going on right now. We’re seeing inflation but I don’t know if we will dip into recession… I think, again, it doesn’t really change what we’re trying to do.

But I believe it will have an impact on the marketplace, because I do think that if we head into [recession], you probably will see people more closely evaluate all of their spending. Until now, if you ask people how many streaming services they’re willing to pay for, the answer has been ‘one more than I have’. That’s been backed up by the reality of how many people are paying for it and that average just keeps going up. I think it’s – currently, in the US six streaming services that people pay for.

I do think that if we continue to see the trends we’re seeing with inflation, it’s inevitable that people will look at all their spending more closely. It doesn’t change what we do, other than it just makes it more important than ever to be one of the top choices that people make. We think we’re in that position. But again, we never take that for granted. It’s something we have to earn every day.