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Disney’s disruption of digital advertising could usher in a new era of innovation

A gloved cartoon hand skips a small megaphone across the surface of a smartphone.

Illustration by Nick DeSantis / Shutterstock / The Current

Digital media has long been (correctly) suspected of hiding too much in the shadows. Recently, Disney made a bold move that hit the news, offering hope for a future that is more open and transparent. Its maneuver — shunning traditional supply-side platforms (SSPs), including Google’s ADX, in favor of direct supply paths — has the potential to create a seismic shift in how ads are bought and sold. At first glance, this simply cuts out one of two intermediaries, but the effects are deeper, including some likely stirring of panic in those who have built businesses that thrive in the dark.

Unpacking Disney’s strategy

At its core, Disney's move bypasses SSPs, which could lead to CPMs either becoming 10-20% cheaper than its competitors or it could simply take that 10-20% for itself. Regardless of where that 10-20% goes, competitors like NBC and Paramount are instantly put at a disadvantage. This can help boost Disney’s share and/or profits in the streaming era where platform growth has plateaued, and consumers are rotating subscriptions due to increased fragmentation. With linear profits no longer guaranteed and streaming profitability not proven for most content companies, such a difference is not trivial—it's transformative.

Ripple effects through the supply chain

Beyond the immediate cost savings, Disney’s strategy disrupts the established order, challenging the very role of SSPs. These platforms, which have long acted as the bridge between demand-side platforms (DSPs) and publishers, find their relevance and revenue streams under threat. Now SSPs will have to decide: Do they want to compete with DSPs and offer full buy- and sell-side services or change their business model? In the end, this is a false choice.

SSPs were built to solve two problems for publishers. The first was to provide “dumb pipes” between publishers and DSPs. The second was to optimize publisher yield. Without revisiting too much history, most SSPs built a company whose story could pass as software as a service (SaaS). Yield management may have a SaaS component, but it’s inherently a service business. Dumb pipes are a commodity business, which leaves pursuing buy- and sell-side aggregation as the “best” path. If neither of these original purposes is still valid, that’s quite the pickle when billions of investments are involved!

The agency conundrum

SSPs aren’t the only ones affected. For agency holding companies, the implications are equally profound. The end of post-auction bid reductions/discounts — hidden rebates from SSPs — means a loss of a lucrative, albeit opaque, revenue source. Public and private equity-owned agencies and agency holding companies face a challenge similar to the SSPs in this respect. They must show “up and to the right” growth and now will have to find a way to replace this very healthy revenue stream.

A future fueled by innovation

Perhaps the most exciting outcome of Disney’s decision is the potential for innovation for everyone in the industry. As SSPs confront the existential threat posed by direct supply paths, they are compelled to evolve or face obsolescence. Agencies, too, must evolve and figure out how to earn a fair profit without undisclosed practices.

To achieve great outcomes from this industry shift, two changes are required. First, brands must be more vigilant than ever in achieving transparency while paying agencies who deliver value for a fair profit. Second, agencies and advertising technology companies must be client-centric rather than organization-centric.

The push

I’ll end with this: Thank you, Disney, for using your size, quality and clout to advance our industry forward. Thank you, Adalytics, for fearlessly publishing data about fraud to alert the industry’s largest brands and agencies. Thank you to DSPs that provide log-level data. And thank you to pitch consultants who help bridge marketers’ expectations of cost savings with the pursuit of real results and value.

This isn’t just about cutting costs or sidestepping intermediaries; it’s about fostering a digital advertising ecosystem that values clarity, fairness and directness.


This op-ed represents the views and opinions of the author and not of The Current, a division of The Trade Desk, or The Trade Desk. The appearance of the op-ed on The Current does not constitute an endorsement by The Current or The Trade Desk.