i3 - January/February 2018 - 57

we can harness artificial intelligence to
gather and understand data to help us
create new products, and how we can take
advantage of innovations in augmented
reality and virtual reality. Of course, we
haven't had the mobile phone for all that
long. We're probably spending most of
our time today trying to optimize for that,
with the understanding that something
better may come along. Then we'll try to
pivot as we have for 130 years.
You mentioned artificial intelligence.
How is it impacting your business today?
Today it is mostly on our free-to-the-consumer mobile and websites. It's helping us
decide where to focus our content. It helps
us with headline selection, picture selection and layout. That does not replace the
creativity of our writers, editors and videographers, but it's a tool that helps them
understand what's happening in the world
on a real-time basis.

Swartz: Adrienne Grunwald. Naylor: Vivien Killilea/Getty Images

Do you see artificial intelligence taking
more of a creative role in, say, producing
a headline by itself?
There are already machine learning
programs that are trying to write headlines or write stories. I happen to be
chairman of the Associated Press, which
has done some interesting work in areas
like machine automated earnings
reports on companies. Clearly, machines
will play a greater role, but at least for
the foreseeable future, I think the maximum amount of creativity will still be
provided by individuals. We're trying to
get smarter about using machines
and data analysis to help us make better
decisions, but the individuals are still
making the decisions.
One of the limiting growth factors for
a content business is that people have
a finite amount of time. Is the content
business a zero-sum game?
In 2018, I would say at least 30 percent of
the company's overall profits will come
from business content, business data and
business software. We think this is the
way for part of our company to cut
through all of this clutter. The businesses
we have on the B2B side are proving that
if you have data or software that is used in
your clients' day-to-day activities, that's a
very powerful place to be.
C TA . t e c h / i 3

PETER NAYLOR
SENIOR VICE
PRESIDENT OF
ADVERTISING
SALES AT HULU
HULU CLEARS FUTURE AD
BUYERS A FRESH PATH
Peter Naylor is the senior vice president of Advertising Sales at Hulu. Prior to
Hulu, he was executive vice president of Digital Media Sales for NBCUniversal.
Launched in 2008, Hulu describes itself as "the only TV service that brings
together live, on-demand originals, and library content all in one place, across
living room and mobile devices," including news, sports and entertainment.
Hulu has been evolving, especially in advertising. How would you
describe where that evolution is now?
When we started 10 years ago, we were 100 percent consumed on a computer. Today, it's only nine percent. We've put the TV back on the TV in that
78 percent of Hulu viewing happens in a television environment. Ten years
ago, we were 100 percent free and today we're the only subscription service
with both an ad-supported on-demand offering and a commercial-free plan.
That's an evolution of our business model. Ten years ago, we were 100 percent
acquired and licensed content. Today, originals are a big part of our growth
strategy, in addition to our robust library.
Today, we sell audiences horizontally because we know marketers want to
buy customers, viewers, and consumers - their target audiences. We've also
embraced the two-way conversation in advertising with interactive ads, and
we've developed more creative opportunities for brands with custom content
and ad solutions.
You offer viewers a platform choice - ad-supported or commercial
free. What surprises you about how people choose?
For the commercial-free choice, many people would think, "Oh, it's young
rich people." But no. It's not about income or age or gender. It's about their
attitude towards ads.
There are ad acceptors and ad avoiders. Most people are ad acceptors. For
them, relevance is key. At Hulu, we leverage first- and third-party data to
increase relevance in our ad-supported offering. When we talk data, buyers
might think programmatic and the promise of efficient pricing. To me, the
promise of programmatic, what we call AdvancedTV, comes from its core
tenets of data and automation. The promise is that you serve the right ad to
the right person at the right time. I maintain that most people don't hate ads,
they hate irrelevance. Do a better job of steering the right ad to the right
viewer, especially in a limited ad environment, and you'll find acceptance.
What about data's effect on Hulu's future content offerings?
It's undeniable, data will inform a lot of creative decisions. But once everyone has mastered data, then guess what comes back to the forefront?
Creativity and judgment when it comes to content.
What words of advice does Hulu have for conventional broadcast
marketers in the new economy?
Challenge the long-established assumptions you have. Re-examine the
playbook - 15- and 30-second ads work, but you have such a creative
JANUARY/FEBRUARY 2018

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i3 - January/February 2018

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