February 8, 2023

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Disney Ad Server: Behind the Tech Powering Disney+ With Ads, Hulu

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“Do or don’t. No try.” — Yoda (“The Empire Strikes Back,” 1980)

Disney’s prowess as an entertainment powerhouse is undisputed. Aaron LaBerg, chief technology officer of Disney Media and Entertainment Distribution (DMED) argues that the company has also developed an industry-leading expertise in ad technology.

Over the past several years, LaBerge’s team has built its own ad-delivery stack from the ground up centered on the proprietary Disney ad server. The company deployed the new Disney ad server on Hulu last year — and it’s now powering Disney+ with ads, which launched last month. Currently, Disney ad servers serve approximately 500 million ad impressions per day.

“What you saw with the ads on Disney+ was the first product that was launched from an end-to-end perspective on the ad server,” LaBerge said.

Why did Disney develop its own proprietary technology for digital advertising? Owning that part of the chain gives the company more flexibility and control, according to LaBerge, to prioritize delivery behavior for advertising clients and its own business. At the same time, the Disney ad server is designed to integrate with partner ad solutions — on Disney’s own schedule, without relying on a third-party vendor, as some streaming rivals do. (For example, Netflix has partnered with Microsoft to run ads outside of the Xandr platform, which Microsoft acquired from AT&T.)

The development of the Disney ad server “focuses on our continued commitment to the advertising business,” LaBerge said.

So far, Mouse House hasn’t disclosed how many people have subscribed to Disney+ Basic With Ads ($7.99/month, 27% less than the no-ads plan at $10.99/month) since its launch in the US on Dec. 8, or a timeline for the cheaper product’s international expansion.

Executives will likely shed some light on Disney+ ad-supported levels when Mouse House reports December 2022 quarterly earnings (Q1 of Disney’s 2023 fiscal year) on Feb. 8. It will be the first call with returning CEO Bob Iger — who took over in November after the Disney board abruptly booted Bob Chapek from the Magic Kingdom. Before that, the company plans to give an update on its advertising with the livestreamed Disney Advertising Tech & Data Showcase this week (Wednesday, Jan. 25), leading up to its May upfront presentation to marketers.

The core component of Disney’s Unified Ad Platform (dubbed UAP internally) is the Disney Ad Server (DAS). With DAS, Disney has direct control over key ad-decision-making mechanics, according to LaBerge. It also provides support for proprietary ad formats developed by Hulu, including Pause Ads, Binge Ads and GatewayGo (which show viewers interactive, personalized marketing offers).

Because Disney owns and controls DAS, the company can use first-party data about sharing that information with an outside organization without any privacy concerns. Audience Graph, Disney’s first-party data, which has been in development for more than a decade, gives advertisers access to more than 1,800 segments with visibility into 100,000 audience attributes, per LaBerge.

Aaron LaBerg, CTO of Disney Media and Entertainment Distribution

Disney’s unified ad platform has something nicely called YODA — which stands for Yield Optimized Delivery Allocation. YODA is an algorithmic engine that determines when to serve ads to an individual audience. Later this year, according to LaBerge, YODA will enable automated competition between direct-sold and programmatic ad buying; That, the theory goes, will allow Disney to increase yield optimization at scale with higher CPMs (cost per thousand impressions). The feature will tap into Disney Realtime Ad Exchange (DRAX), the media conglomerate’s in-house supply-side platform (SSP) that conducts internal auctions across all programmatic endpoints to select the highest-priced ads while supporting key partner deals.

“We’re meeting the full curve with the right demand,” said LaBerge, who was ESPN’s chief technology officer before assuming his current role as DMED’s CTO in 2018.

In addition, UAP offers a self-service component, designed to lower the barrier to entry for small to mid-sized agencies to create and manage their own campaigns to purchase Disney’s premium advertising inventory. Disney says it will open it up to a wider number of companies in 2023.

“Building a dynamic ad platform with measurement is incredibly complex,” LaBerge said: “It’s a ‘forever’ investment for Disney.”

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