Disney Plans to Launch New Products For Ad-Supported Tier of Disney+

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As Disney launches the ad-supported tier of Disney+ Thursday, subscribers can expect to see 15-and 30-second commercials from marketers including Marriott, Chick-fil-A and Mercedes. The real bells and whistles are likely to arrive next year.

Disney expects to introduce a number of ad-tech innovations to its advertising offering on Disney+ in 2023, says Rita Ferro, the company’s president of advertising sales. “We want to make sure that for the first time, brands can come to the platform and have a great experience,” she says. But in the not-too-distant future, “there are plans to continue to drive innovation across our ad technology” she adds. “Those are coming,” and will likely be discussed in 2023.

Launch of the ad-supported tier comes as many major media companies have grown concerned about the viability of streaming. Disney and its rivals have thrown millions of dollars into the creation of new content aimed at wooing subscribers to Disney+, HBO Max and more. But there’s a growing sense among investors and media executives that growing subscribers will be more difficult, particularly as more streamers go online and potential customers worry about what’s in their wallet as fears rise about a possible recession.

A survey of 11,435 U.S. streaming customers by Kantar found that one in four Disney+ subscribers was willing to watch ads on the new tier in exchange for paying a lower price. Disney intends to seek $7.99 a month for the Disney+ ad-supported tier, and $10.99 for the service without commercials.

Disney has secured more than 100 advertisers for launch of the commercial tier, says Ferro, and has commitments from all major media agencies, including Dentsu, Havas, Horizon, Interpublic Group’s Mediabrands, Omnicom Media Group, Publicis, RPA, Stagwell and WPP’s GroupM. The deals will bring , more than dozen different ad categories  — including retail, apparel, autos, financial services, restaurants, technology, telecom, consumer goods and travel – to the service. Ferro says advertisers have contributed enough different creative executions to ensure viewers won’t feel they are being inundated with the same ad time and time again — a growing concern for streaming subscribers and the advertisers who wish to reach them.

Most of the commercials will show up in the form of so-called “pre-rolls” and “mid-rolls,” says the executive. Disney has committed to show no more than four minutes of commercials per hour, and will  not run ads for alcohol or political campaigns. Users who are identified as pre-schools or young children under seven will not be served as, and users identified as being under 17 will see ads but will not be allowed to be targeted specifically by sponsors, says Ferro.

By the time the industry starts to plan for its next “upfront” ad sales session in 2023, Ferro expects to be able to talk to advertisers about how ads should appear alongside series and movies, as well as in programing that is streamed live, as it happens.

While Netflix has recently started to sell ads for its own commercial tier, Ferro feels Disney hasn’t been competing with those efforts. “We were out first in the upfront” earlier this year, she notes, and the company was able to use its longstanding ties with Madison Avenue to introduce the new tier along with the rest of its portfolio.

Ferro says that Disney+ ad slots are not sold out – by design. “We had really strong demand from advertisers,” she notes, but “the last thing we wanted to was take too many and not be able to deliver” the results clients sought.