Disney Implements New AI-Backed Advertising Tool for Disney+ and Hulu Ads

In the first quarter, the ad-supported version of Disney+ reportedly garnered the interest of over 1,000 advertisers.

Walt Disney is harnessing artificial intelligence to power a new advertising tool that will help brands tailor their commercials to fit the mood of specific scenes within a movie or television series.

Dubbed “Disney’s Magic Words,” this tool introduces a new form of contextual advertising for the Disney+ and Hulu streaming services. It uses a combination of AI and machine learning to analyse and tag scenes across its library, identifying the contents, brands, images and mood.

Brands can use these descriptive tags, known as metadata, to identify a specific scene or mood and then personalise messaging to match.

“What that means is leaving broad demos (demographics) behind and buying specific audiences,” said Geoffrey Calabrese, Omnicom Media Group’s chief investment officer. “These magic words are literally going to be able to connect me to the emotions of the consumer, at an audience level. And for us, that’s really a game changer.”

Omnicom is one of six global advertising companies taking part in an early beta test of this advertising product, Disney told Reuters. The other beta partners are Dentsu, GroupM, Horizon Media, IPG Mediabrands and Publicis Media. The company announced the new ad features last month, at a showcase at the Consumer Electronics Show in Las Vegas.

Rita Ferro, Disney’s global head of ad sales, said the feature allows advertisers to maximise the impact of their messages “because it resonates with concepts that the viewers experience.”

Disney’s investment in streaming ad technology comes as advertisers are moving away from broadcast and cable TV, along with viewers. The company’s advertising revenue fell nearly 3 percent in its fiscal 2024 first quarter to $3.35 billion (roughly Rs. 29,100 crore), according to LSEG, reflecting declines in traditional TV viewership. Researcher eMarketer estimated Disney+ accounted for about $790 million (roughly Rs. 6,600 crore) in revenue last year.

Disney does not report its advertising revenue.

CEO Bob Iger told investors during the company’s quarterly investor call on Wednesday that the ad-supported version of the Disney+ service has attracted more than 1,000 advertisers in the first quarter, a tenfold increase from launch.

Our innovative technological approach ensures that our entire streaming portfolio will become the premier destination for brands in the years to come,” stated Iger in a statement to Reuters.

According to Joe Earley, president of Disney’s direct-to-consumer business, half of consumers who subscribe to Disney+ opt for the more economical version of the service, which includes advertising. He mentioned that the company has dedicated years to refining ad technology tailored specifically for streaming. Hulu, the company’s service, debuted as a free, advertising-supported platform in 2008.

“Disney+ didn’t need to start from scratch,” remarked Earley. “It hit the ground running.