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Disney makes a big bet on programmatic as upfronts loom

Mouse House says TV buyers will be able to access the company’s treasure trove of properties across both Disney and Hulu through a single access point ahead of the upfronts this May.

Disney said ahead of the upfronts that it’s making a “multi-year, nine figure investment” to bolster its tech capabilities, signaling to buyers that it sees the TV marketplace moving toward a digital future, where advertisers can execute one-to-one audience deals programmatically.

Mouse House’s move comes as U.S. media companies are rethinking the traditional upfronts, which line up advertising commitments for their next programming cycle. Instead, cable and broadcast TV heavyweights are now emphasizing ambitious plans to automate and streamline the buying process for both their linear and connected TV content offerings.

For Disney, that includes the newly-announced Disney Hulu XP, which the company describes as its first step toward convergence. Hulu inventory was previously kept separate from Disney properties (meaning buyers needed to have an ESPN deal, Hulu deal, et cetera), but through a partnership with The Trade Desk, advertisers can now programmatically execute digital upfront commitments across all of Disney’s inventory — ABC, Freeform, National Geographic, FX, ESPN and Hulu — through a single access point with one deal ID.

Disney’s decision to automate and centralize its inventory is likely to win over brands who have grown frustrated with the upfronts. Its investment also underscores growing trends in the TV marketplace, as advertisers shift budget away from content-first strategies and toward an audience-first approach. To that end, Disney is investing in ways that would allow a brand such as P&G, for instance, to pair its data segments on “moms” with Disney’s “family” segments programmatically.

In other words, Disney is building out new technology for the upfronts, which are forever changed following accelerated trends borne of the pandemic.

Audience-based buying will represent more than $10 billion of the $70 billion spent on U.S. TV advertising in 2021, a 33 percent upswing year-over-year and 400 percent increase from 2017, eMarketer says.

Disney Drax

If Disney’s first step was putting all of its inventory in one place with Disney Hulu XP, then step two is building out its own ad exchange, where buyers can compete for CTV inventory through a header bidding model (more on that in a bit).

To that end, the company introduced Disney Drax, a real-time ad exchange which would allow advertisers to access all Disney inventory instead of those that have historically made it to auction.

Adopting a header bidding model will also level the playing field for buyers, allowing them to all compete for any given Disney inventory at the same time. Such a move would be a departure from the so-called waterfall method and make buying CTV inventory similar to how display advertising operates today.

“Drax flattens the waterfall and gives parity to all deals,” Lisa Valentino, executive vice president of client and brand solutions at Disney, said. “It gives our clients ultimate control and choice while maximizing the ability to scale campaigns.”

The pivot toward tech doesn’t necessarily mean the upfronts will eventually go away. Industry leaders widely believe that the convergence of connected TV and linear TV will actually bolster the upfronts. Additionally, buyers will still want to lock up inventory in a predictable fashion.