Disney, which barely a year ago took full operational control of Hulu and seven months ago launched subscription service Disney+, is making both streaming services key parts of its presentation to ad buyers.
Instead of the traditional in-person spring upfront event at New York’s Lincoln Center, the company sent advertisers a 45-minute video showcasing its various brands as it enforced social distancing during the COVID-19 pandemic. Its sales force is also conducting a series of virtual meetings with clients old and new.
“Disney is a leader with connecting Generation Family with Generation Stream,” intoned American Idol host Ryan Seacrest during one sequence of the Disney Advertising Sales Virtual Roadshow. As he spoke, the screen showed a montage of iPads, laptops and phones and a clip from Disney+ flagship show The Mandalorian played. It was an unlikely tableau during a broadcast upfront, but it signaled the fact that traditional media companies have gone all in on streaming, none more so than Disney.
“Hulu’s younger, more engaged audience watches TV differently,” Seacrest continued. “More bingeing, more devices, more options. They expect personalized, on-demand options that give them choice and control.”
Hulu’s ad revenue reached $1.5 billion in 2019 and is on track hit $2.7 billion by 2021, according to a recent forecast by eMarketer. Delivering programming via the internet affords any programmer some inherent advantages in terms of targeting. That means that while the overall ad environment is chaotic due to COVID-19, buyers are able to hit certain demographics or areas of the country with more precision on Hulu. The consensus among ad business experts and Wall Street analysts is that the industry is in the midst of a secular shift from linear ad commitments to streaming buys and in the foreseeable future it will be a blend of both.
Last month, Disney reported 32.1 million total Hulu subscribers, up from 30.4 million from last quarter and 25.2 million a year ago. About two-thirds of those get an ad-supported version, with the rest springing for the $12-a-month ad-free version. Disney+, meanwhile, has come out of the gate strong, racking up 54.5 million subscribers through May 4. A $13-a-month bundle of Disney+, Hulu and ESPN+ appears to have gotten traction, though the company has not broken out numbers for how many people get the bundle.
Reach is extended via Hulu, Disney argues, with viewers under 35 watching twice the amount of streaming programming than those older than 35. Two-thirds of viewers seeing an ad on Hulu did not see it on linear TV. The live component of Hulu is another selling point — it now has more than 3 million subscribers via its pay-TV bundle.
In an interview with Deadline, Disney sales chief Rita Ferro said it made sense to highlight subscription streaming — even an ad-free service like Disney+ — to an audience of brand marketers. “As we think about our ability to form consumer relationships, it’s important to highlight all of the ways we do that, whether they’re ad-supported or not,” she said. “Using data to create the products is important.”
Ferro, who took over the entire Disney portfolio about 18 months ago, is weaving Hulu and ESPN+ into all conversations with ad buyers. “We are bringing out one unified ad product,” she said. “Clients will be able to buy one product across Disney and Hulu.” Messages from the Disney broadcast upfront will be reinforced later this month at Hulu’s presentation during the NewFronts. On June 22, Hulu will take part in the virtual event. Prior to COVID-19, it had signed on to present a week’s worth of NewFronts panels on streaming in New York.
Luminate, Disney’s suite of advanced advertising products, has expanded its offerings and unveiling the latest best-in-class advanced advertising solutions following the roadshow. The sales unit has engaged data firm Samba TV to offer advertisers ways to gauge offline conversion, foot traffic, digital engagement, brand lift, tune in, reach and frequency across linear, digital and connected TV.
On October 1, the first new ad product developed under Disney’s control of Hulu, Disney Hulu XP, will launch. The company describes it as delivering a “massive addressable audience across all screens and all content lengths and the best of premium video, with targeting options that drive business.” Ad buyers will be offered guarantees on completed video views.
As recently as a couple of years ago, broadcast networks have characterized streaming — in particular, YouTube — as The Other. But with skyrocketing viewing of streaming leading up to but especially during COVID-19 and billions being invested into direct-to-consumer offerings, they have pivoted to make streaming a foundational part of their pitches.
NBCUniversal’s Peacock, which launched in April, is mostly ad-supported, and WarnerMedia’s HBO Max, which hit the market last week, will add an ad-supported tier in 2021. Fox has largely stayed out of the streaming wars thus far, but it recognized the value of internet-delivered ads by acquiring AVOD startup Tubi this year. ViacomCBS bought Pluto in 2019 and also has CBS All Access and both made notable appearances in that company’s own upfront videos.
More broadly, large-scale streaming platforms like Amazon Fire and Roku are serving significant numbers of ads to their tens of millions of U.S. viewers. Netflix is still ad-free, and its big lead in global subscriptions and a defining role in the customer experience of streaming raise questions about how readily mass audiences will accept commercial interruptions in streaming.
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