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I recently read an article in the Financial Times that predicts Hulu will catch YouTube next year in gross advertising revenue. This prediction is clearly a response to Hulu’s ability to attract brand advertisers with their higher quality content versus YouTube’s predominantly user-generated platform (even though YouTube’s has recently cozied up to large studios such as MGM).

Despite this forecast and a recent article in Variety predicting that “Hulu ads are expected to keep growing despite the tough economy”, I believe that YouTube will remain on top during this economic downturn. YouTube’s recent business decisions to offer video ad words on YouTube (basically, their search model transplanted into YouTube) and to create content deals with large studios (MGM and Lions Gate) and talented content creators (Seth McFarlane) will position them well for the times to come. After all, Hulu’s user base is still a small fraction of YouTube’s.

I recently spoke with Patrick Jones, Director of Client Relations at InterClick (an ad network), about how he feels the recession will effect digital distribution platforms such as Hulu and YouTube:

“Hulu offers premium branded advertisements in the form of pre and mid-roll video ads resembling TV commercials, whereas YouTube’s reach, technology, and scalability make it better suited for direct response and ROI driven advertisers. In an economy that is already seeing ad budgets being cut, dollars that cannot show positive ROI will be the first to get slashed.”

Time will tell if YouTube is a billion dollar bust for Google. If advertisers remain weary of the immensely popular user-generated platform, Hulu could turn out to be the model that is used for digital distribution going forward. Either way, keep in mind that gross revenue is not net revenue and YouTube will certainly dominate in that category for some time.