A “less is more” model—fewer ads, higher prices—will define advertising in the age of online video. - Inspired by Hulu’s business strategy

Hulu, the increasingly popular online video site, turned one year old this week. Much of the attention it is garnering is focused on its innovative approach to advertising: offering interactive games during ad breaks, allowing viewers to choose the types of commercials they can see, employing a Pandora-like thumbs up/down system to rate ads.

The site displays a small number of ads -- only ad is shown per segment break. Hulu's rationale for this: fewer ads are more memorable and the site uses this premise to charge higher fees to advertisers.

"While Hulu was not the first site to serve up full-length television shows or create new advertising units, it now dominates the emerging market for ad-supported TV and movie streaming," writes Brian Stelter of the New York Times.

"I’ve been waiting for this for 10 years,” said Greg Smith, Neo@Ogilvy's COO. “Hulu takes TV content, which is the best long-form video content there is — the Web has yet to come up with something as good — and it just breaks it out of the tyranny of the schedule."