Disney is testing “Magic Words,” an AI-based tool for streaming advertising that analyzes scenes from movies and shows to personalize ads on Disney+ and Hulu and aim to create an emotional connection with viewers.
At a glance
- New tools from Disney: Disney is testing a tool called “Magic Words” that uses AI to match ads to specific scenes in movies and shows.
- AI and Metadata: This tool analyzes and tags scenes to identify content, brands, images, and moods, and creates metadata for personalized advertising.
- Emotional connection: Advertisers on Disney+ and Hulu can tap into consumers’ emotions by targeting specific audiences rather than broad demographics.
- Global Partnership: Disney partnered with six global advertising agencies to beta test the tool and improve the effectiveness of its advertising.
- Transitioning from a traditional TV: As traditional TV viewership declines, Disney aims to increase advertising revenue by leveraging streaming services and personalized advertising technology.
- Disney’s streaming success: The ad-supported version of Disney+ attracted more than 1,000 advertisers in the first quarter, a tenfold increase since launch.
- Streaming Competition: The initiative follows trends in the streaming industry, where Amazon is expected to generate nearly $5 billion in annual revenue from video advertising.
Disney Tests AI-Based Advertising Tool for Streaming Service
To revamp its advertising strategy and adapt to the changing landscape, Disney has entered the beta testing phase of a groundbreaking advertising tool tailored to its streaming services, Disney+ and Hulu. The tool, aptly named “Magic Words,” uses artificial intelligence (AI) and machine learning to precisely match ads to specific scenes in movies or shows.
Magic Words: Exploring Technology
The Magic Word tool’s core functionality involves meticulously analyzing and tagging scenes within Disney’s vast library of movies and TV series. Through this process, the tool identifies the content, brand, imagery, and mood contained within each scene, creating a rich pool of metadata that advertisers can leverage to personalize their messaging.
Contextual Advertising: Beyond Demographics
The innovative aspect of this advertising approach is that it moves away from traditional demographic targeting. Instead, advertisers can now connect with consumers’ emotions by tailoring their ads to the narrative and mood of a particular scene. This move toward contextual advertising aims to enhance the resonance of advertising by aligning it with the viewer’s experience.
Beta Testing and Industry Partnerships
Disney has partnered with six global advertising agencies to beta test the Magic Word tool. This strategic move highlights the company’s commitment to improving and optimizing the tool before widespread implementation. The goal is to seamlessly integrate advertising into the streaming experience to maximize the impact of advertising.
The changing tide of advertising
The timing of Disney’s investment in streaming ad technology is significant given the industry’s shift away from traditional broadcast and cable TV. Reflecting this trend, Disney’s ad revenue declined by about 3% in the first quarter of fiscal 2024, reflecting a decline in traditional TV viewership.
The rise of ad-supported streaming
In contrast to the decline in traditional advertising revenue, the ad-supported version of Disney’s streaming service, Disney+, has seen significant growth. In Q1 alone, more than 1,000 advertisers have flocked to the platform. This significant increase, which is a tenfold increase since launch, highlights Disney’s success in improving advertising technology that is specifically tailored to the streaming environment.
Disney’s Streaming Evolution
Disney’s foray into streaming dates back to the launch of Hulu in 2008. Initially a free, ad-supported service, Hulu played a key role in Disney’s evolution in streaming. The ad-supported model not only attracted advertisers, but also served as a testing ground for Disney’s ad technology advancements.
Advertising Revenue State: Amazon’s Parallel Journey
In the broader context of streaming services, Amazon has also entered the video advertising space with significant revenue projections. According to reports, Amazon could realize close to $5 billion in annual revenue from its video advertising activities. This includes introducing advertising into Prime Video content, with an additional option for North American users to pay a nominal fee for an ad-free viewing experience.
As Disney navigates the changing waters of the advertising landscape, the magic word tool represents a strategic leap toward a more personalized and emotionally resonant approach. The company’s investment in streaming ad technology aligns with a broader industry trend in which streaming services are becoming a focus for advertisers looking to connect with audiences in innovative ways. Disney’s journey, marked by the evolution of Hulu and the success of its ad-supported Disney+, reflects its commitment to staying at the forefront of the streaming revolution.
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