Disney Tests AI Tool “Magic Words” for Emotional Streaming Ads

Disney is testing “magic words,” an AI-powered tool for streaming ads. It analyzes scenes in movies and shows to personalize ads on Disney+ and Hulu, aiming for emotional connections with viewers.

The entrance to The Walt Disney Studios in Burbank, California. Credit: Patrick T. Fallon/Bloomberg
The entrance to The Walt Disney Studios in Burbank, California. Credit: Patrick T. Fallon/Bloomberg

Disney Tests AI-Driven Advertising Tool for Streaming Services

In a bid to revamp its advertising strategy and adapt to the evolving landscape, Disney has entered the beta testing phase for a groundbreaking advertising tool tailored for its streaming services, Disney+ and Hulu. This tool, aptly named “magic words,” leverages artificial intelligence (AI) and machine learning to intricately match commercials with specific scenes in movies or shows.

Magic Words: A Dive into the Technology

The core functionality of the magic words tool involves a meticulous analysis and tagging of scenes within Disney’s extensive library of movies and television series. This process allows the tool to identify the content, brands, images, and mood encapsulated in each scene, creating a rich pool of metadata for advertisers to harness in personalizing their messaging.

Contextual Advertising: Moving Beyond Demographics

The innovative aspect of this advertising approach lies in its departure from traditional demographic targeting. Instead, advertisers can now connect with the emotions of consumers by aligning their commercials with the narrative and mood of specific scenes. This move towards contextual advertising aims to enhance the resonance of advertisements by aligning them with the viewer’s experience.

Beta Testing and Industry Partnerships

Disney has collaborated with six global advertising companies to conduct beta testing for the magic words tool. This strategic move underscores the company’s commitment to refining and optimizing the tool before its widespread implementation. The goal is to maximize the impact of advertisements by seamlessly integrating them into the streaming experience.

Shifting Tides in Advertising

The timing of Disney’s investment in streaming ad technology is crucial, given the industry-wide shift away from traditional broadcast and cable TV. Reflecting this trend, Disney’s advertising revenue experienced a nearly 3% decline in the fiscal 2024 first quarter, mirroring the decrease 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+, Disney’s streaming service, has witnessed a significant uptick. The first quarter alone saw over 1,000 advertisers flocking to leverage this platform. This substantial increase, amounting to tenfold growth since its launch, underscores Disney’s success in refining ad technology tailored explicitly for 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 has played a pivotal role in Disney’s evolution in the streaming landscape. The ad-supported model has not only attracted advertisers but has also served as a testing ground for Disney’s advancements in ad technology.

Ad Revenue Landscape: Amazon’s Parallel Journey

In the broader context of streaming services, Amazon has also entered the arena of video advertising with substantial revenue projections. Reports suggest that Amazon could realize nearly $5 billion in yearly revenue from its video advertising efforts. This includes the introduction of commercials to its Prime Video content, with an additional option for users in North America to pay a nominal fee for an ad-free viewing experience.

As Disney navigates the shifting currents of the advertising landscape, the magic words tool represents a strategic leap towards a more personalized and emotionally resonant approach. The company’s investment in streaming ad technology aligns with the broader industry trend, where streaming services are becoming the focal point for advertisers aiming to connect with audiences in innovative ways. Disney’s journey, marked by the evolution of Hulu and the success of ad-supported Disney+, reflects a commitment to staying at the forefront of the streaming revolution.

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The information above is curated from reliable sources and modified for clarity. Slash Insider is not responsible for its completeness or accuracy. We strive to deliver reliable articles but encourage readers to verify details independently.