Audiences continue to cut the cord and switch to online streaming services. And as they make the jump, advertisers follow.
We see this clearly when we look at Disney’s assets. Hulu is positioned to quickly surpass ABC in advertising revenue, and Disney is leveling the playing field between traditional TV advertisers and small businesses with their ad tech offerings.
How does Disney use the two separate entities for advertising, and how do Hulu and ABC advertisers compare?
Disney’s Advertising Model is Evolving
Hulu, along with ESPN+ and ABC.com, are quickly advancing on ABC in ad revenue.
Online ad revenue grew 47% last quarter, while broadcast advertising only grew 5%. “The secret weapon with Hulu is obviously the rapid growing, robust advertising business,” remarked Chief Executive Officer Bob Chapek.
Chapek pointed to Disney’s new self-service technology that consolidates ad buying across various networks and platforms. Instead of working with different representatives at ESPN, Hulu and ABC, advertisers can access data themselves and buy ads more efficiently.
The new technology allows smaller advertisers, who typically leverage digital marketing, to work with Disney. Roughly 1,000 new clients were onboarded last year. Within five years, Disney expects half of its ad sales to be automated.
Even as Disney’s online ad sales surge and its tech advances, traditional sales are going strong. A 30 second spot in its upcoming Academy Awards will run for $2 million. Despite declined viewership over the last decade, the ceremony continues to be one of TV’s biggest events and ABC seems confident that it will bring in significant revenue.
Disney uses Hulu to advertise ABC programs and to attract a separate pool of advertisers than the traditional network.
In fact, Disney-owned programming, including specific shows on FX, FOX, Freeform, ABC, and ESPN, are extensively marketed on Hulu. However, other Disney assets, like Disney+, resorts, or theme parks, are not advertised on Hulu. And there is only a scarce amount of marketing for the Disney Bundle (Hulu, Disney+, ESPN+).
In January, 20% of total spots were house ads (marketing for Disney programs, from ESPN to ABC). However, this percentage was down the following month. In February house ads marketing Disney media dropped to 13%. This suggests that there was more demand for outside advertising in February.
When studying the data, we found it interesting that there is low overlap between advertisers running on Hulu and ABC. This is true across current seasons and especially pronounced across the library inventory (older seasons).
Taking a look at specific programs streaming on Hulu, we found:
- 28% of advertisers on Hulu’s distribution of The Bachelor also appeared on its ABC airing.
- 8% of advertisers on Hulu’s For Life also appeared on its ABC airing.
- 6% of advertisers on Hulu’s The Conners also appeared on its ABC airing.
- 0% of advertisers Hulu’s The Rookie also appeared on its ABC airing.
The low overlap affirms that Hulu is attracting smaller digital advertisers rather than traditional TV advertisers. But smaller doesn’t mean they don’t bring in the money. According to eMarketer, Hulu’s ad sales should bring in about $3 billion in 2021, which is not too far off from Disney’s 2020 broadcast division’s sales ($3.26 billion).
Without cookies in the near future, Disney’s massive mapping of first-party data will become an even stronger magnet for online advertisers. It won’t be long before Hulu’s ad revenue surpasses Disney’s network revenue.
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