Battle of the AVODs: Disney, Netflix Tap Ad Partners

The streaming TV landscape is progressing steadily toward ad-supported models after news broke this week that entertainment giants Disney and Netflix selected adtech partners The Trade Desk and Microsoft, respectively, to power their ad-supported streaming plans (AVODs) and other ambitions. Both deals come at a critical time for the industry as advertisers face a whirlwind of challenges, from the decline of traditional TV amid connected TV’s (CTV) growth in popularity, to increasing calls for better data privacy and alternative identity and measurement solutions.

The Trade Desk will partner with Disney to power programmatic ad buys across Disney’s linear and streaming properties in a first-of-its-kind identity integration that prioritizes consumer privacy and interoperability. The Disney digital properties involved in the deal include Hulu, ESPN+, ABC, Freeform, ESPN, National Geographic, FX, and eventually, the ad-supported tier of Disney+. The partnership enables interoperability between Disney’s proprietary Audience Graph and The Trade Desk’s open-source identity framework, Unified ID 2.0 (UID2), to equip ad buyers with addressable, biddable inventory across Disney’s portfolio. 

Catch up quick: With the industry seeking alternatives to the third-party cookie, identity solutions such as The Trade Desk’s UID2 have emerged, with partners like AMC Networks, Buzzfeed, and Xandr signing on to test and help improve the product. UID is an open-source framework for advertisers, platforms, and publishers, providing a privacy-compliant identifier for advanced audience targeting. UID2 operates across browsers, CTV platforms, and mobile apps, providing a more advanced solution than the cookie it aims to replace. 

“With this agreement, Disney and The Trade Desk are pioneering a new approach to audience addressability in a post-cookie environment,” said Tim Sims, chief revenue officer at The Trade Desk, in a statement. “By creating interoperability between Unified ID 2.0 and Disney’s Audience Graph, we are unlocking the opportunity for our customers to activate their first-party data at scale programmatically, against some of the world’s most premium content, across all channels. As a result, advertisers will be able to deliver relevant advertising, while ensuring consumers have more control over their privacy.”

Related: Media Giants Dazzle TV Advertisers in 2022 Upfronts with Big Plans for CTV, Streaming

According to The Drum, Disney has been working behind the scenes to advance its audience strategy, laying the groundwork for this partnership over the last year with the adoption of cleanroom technology and privacy-first marketing tools. Disney aims to generate as much as half of its addressable revenue through programmatic channels by 2024, with The Trade Desk partnership accelerating that ambition. 

“We’re likely to see similar integrations among other premium publishers now that Disney has partnered with The Trade Desk, helping to further establish UID2 as an important alternative to the cookie,” said Mary O’Brien, programmatic director at PMG. “Once the integration is complete, the ability for PMG brands using UID2 to map their audiences with Disney’s Audience Graph to target users across Disney’s properties as part of media buys within The Trade Desk will be the next generation of programmatic buying.”

Hours after Disney announced its new partnership, Netflix selected Microsoft as its global advertising technology and sales partner, to help power the streaming giant’s AVOD ambitions. The news came after a thorough RFP process that included industry leaders Google and NBCUniversal, among others. 

Related:Netflix Reverses Course on Introducing Ads to the Streaming Service

Netflix announced in April plans to roll out an ad-supported subscription tier (AVOD) by the end of this year, to help boost subscription growth and generate a new revenue stream for the company. Given the tight time frame, Netflix sought an external partner to handle ad sales and technology ahead of the launch. Many presumed frontrunners for the contract, such as Google, operate competing video services, likely narrowing the consideration set for Netflix. 

“Microsoft has the proven ability to support all our advertising needs,” Netflix Chief Operating Officer Greg Peters said in a statement. “More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members.”

Upon launch of the AVOD plan, advertisers will have access to the Netflix audience and premium CTV inventory exclusively via the Microsoft platform. According to The Wall Street Journal, Netflix has said it aims to develop an ad experience that's “less disruptive than ads on traditional TV” but has yet to specify details about its AVOD subscription tier. Earlier this year, Netflix clarified its AVOD plans will take the form of a new subscription tier, and not ad insertion within the Netflix experience available today. 

“CTV advertising remains one of the fastest growing sectors of the advertising industry, and news that Disney will partner with The Trade Desk and Netflix with Microsoft will only accelerate advertiser interest and investment into CTV platforms,” said Nadia Pesina, brand media director at PMG. “It’s still early days for Netflix’s CTV plans, with more questions than answers, but the decision to partner with Microsoft bodes well for advertisers, as their platform is well-established across the global market with consumer privacy kept at the forefront of audience insights and media operations.”