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Credit: DisneyDisney+ subscribers should get ready for a new onslaught of targeted ads, because the Walt Disney Company is expanding its own proprietary ad technology to entice companies to purchase more programming on the streaming service.
Disney CEO Bob Iger recently admitted that the company’s streaming technology was far behind where it needed to be, especially compared to its chief competitor, Netflix. At the 2024 Morgan Stanley Technology, Media & Telecom Conference, he revealed that “When we launched Disney+ in 2019, our goal was to have basically robust video experiences at scale. What we didn’t have was the technology that we needed to basically lower customer acquisition and retention cost, to increase engagement, to essentially grow our margins by reducing marketing expenses.”
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In particular, Bob Iger is desperate to figure out a way to make Disney+ profitable through technological means, whether that means creating a single combined Disney+/Hulu/ESPN+ app that can be sold for an exorbitant price or, more immediately, figuring out how to get subscribers watching more ads.
For months, Disney has been promoting the ad-supported version of Disney+ to the point of slashing its price to far below industry standards to try to get that marketing money. Now, Disney advertising is partnering with two tech giants to try to streamline ways for advertisers to get commercials to specific customers (per Deadline).
The company is expanding its Disney Real-Time Ad Exchange (DRAX, no relation to Dave Bautista) to partner with Google Display & Video 360 and The Trade Desk. In effect, Disney advertising is using new technology to make it easier for companies to buy ads that can be targeted to their optimal markets.
Disney says that partnering with Google and Trade Desk for DRAX Direct will allow “a simpler, streamlined approach to addressable buying across Disney’s streaming portfolio, including Hulu and Disney+.” It is certainly not an accident that this Disney advertising expansion comes on the heels of Disney+ and Hulu being integrated into a single service, currently in beta mode. Although parents have had concerns about the sudden influx of R-rated and mature-themed content landing on the formerly child-friendly service, there’s no stopping the merger now.
DRAX Direct essentially gives advertisers a direct connection to Disney+ personal information and trends, allowing companies of all sizes to pinpoint exactly how, when, and to whom they show ads. In many ways, DRAX Direct seems like the company’s attempts to counterbalance the increased control over advertising via streaming choices. Every major service is currently trying to find a way to make streaming profitable, even if it sours subscribers against them.
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Disney Advertising senior vice president of addressable sales Jamie Power said in a statement, “Disney’s goal is to empower advertisers to transact with the freedom and flexibility that best suits their business needs. Owning our own technology stack allows us to build a direct path between our premium inventory and the leading media buying platforms in the industry, simplifying the way ads are bought and sold on Disney while delivering greater effectiveness for our clients.”
Disney+ has been a massive financial loss for the company ever since it launched, and, at this point, the company can no longer tolerate that, especially with the shareholders watching like hawks. It’s no surprise that it’s going to find any way it can to get valuable ads in front of audiences.
What do you think of streaming services pushing more ads on subscribers? Let us know your thoughts in the comments below!