1. The Disney-Hulu App Collab Continues

A few months back, Disney started playing around with what they termed a “beta” version of an app that combined their Disney+ and Hulu properties into a single interface. The beta version kept Hulu in its own separate Hulu silo, sort of a sneak peek for non-subscribers, 

But a new, non-beta (alpha?) app, released this week, is a full-on merger, with tiles for The Bear and Only Murders In The Building sitting alongside princesses and superheroes.

It’s an interesting strategy, one that is designed, no doubt, to increase Disney’s overall appeal while cutting down on churn. Especially from parents whose kids may have outgrown Disney’s kiddie fare but who have little to no interest in comic book or science fiction IP.

It’s a smart strategy, albeit one that does carry some risks.

Why It Matters

The new app seamlessly weaves Hulu content and key art into the Disney app so that both show up in recommendations and within suggested content in each category.

And therein the problem lies.

Because if  you are one of the many millions who only subscribe to Disney+, every time you click on one of those recommended shows, all you will see is an offer to upgrade to a higher priced combo sub.

Now call me crazy, but if I am a Disney+ subscriber and I see all these new shows, only every time I click on one, I get  “sorry you need to upgrade to watch this” message, then I am going to get the exact same feeling you get when you download a new mobile app, only to find that the only way to get access to all but the most basic features is to pay for an upgrade.

Here in New Jersey we call that sort of bait and switch “a fucking ripoff.”

And that is a real danger to the new app, versus the one where the Hulu content was in a clearly marked containment zone, where you knew it was off limits unless you’d paid for the privilege.

So that’s the big danger for Disney and perhaps they’ve thought this through and they’re going to do things like let people watch a free episode of the Hulu show to make sure they like it before they upgrade.

Maybe.

There’s another more ironic danger Disney faces.

Lots of people know The Bear because it won all sorts of Emmys in the sitcom category. 

Only The Bear, while an excellent show that I very much enjoyed, is not a sitcom. It is not even remotely a sitcom. It’s a complex drama cut into 30-ish minute segments which is why Disney entered it into the “sitcom” category. (The rules say nothing about tone and emotion and everything about the length of the episodes. Hence “sitcom.”)

So anyway, I am thinking that a not small number of people are going to tune into The Bear expecting to laugh. And will be sorely disappointed. And may, actually, decide that it’s one of those shows like Barry, where the Smart Snobby People think it’s funny but no one else does. And WTF Disney, now you think you’re better than us?

So there’s that, though it is a minor factor compared to what could be major fallout from the continual strain of upselling attempts every time a Hulu show is selected.

(OTOH, YouTube tries to upsell me to YouTube TV Every Single Time I watch a YouTube video and I haven’t quit YouTube. Though the fact that I don’t really have other options probably factors in.)

What You Need To Do About It

If you are Disney, you need to find a smoother way to make the combo app palatable to your viewers. Because while combining them is a smart idea, the Constant Upgrade Reminder thing is not.

Personally, I would take a tip from the Amazon playbook and automatically upgrade all of those Disney+ and Hulu customers to the combo package, only make sure it’s to the ad-supported version of the combo package. If they want to watch without ads, then it’s on them to pay a higher price, but otherwise you’ve got a bunch more viewers for your ad-supported platforms, viewers who don’t feel like they’re getting ripped off.

I’d also think about leaving Hulu as a standalone silo or two. There’s something to keeping all of these existing brands as their own subchannels within the app—it's a lot easier for viewers to navigate when they know what to expect. That’s something WBD seems to have done well with Max—all those sub-brands like HGTV, CNN and HBO are a lot easier to grok than vague categories like “Drama” or “RomCom.”

Something to think about.

One more thing to think about: rebranding Hulu Live TV as “Disney TV” is going to make it seem a lot more consumer friendly and a lot more palatable to exactly the sort of audience who still has an appetite for traditional pay TV.

You’re welcome.

2. Contextual Targeting Grows Up

Back in 2022 when we did our last report on FASTs, one of the key findings was that contextual targeting was going to be huge, in that it helped solve a world of hurt around streaming advertising, privacy issues in particular.

And now that prediction seems to be coming true.

IRIS TV just launched a deal library where buyers can select from close to 100 different self-serve contextual deal segments that can be used for PMP (Private Marketplace) buys. (Check out our Q&A with IRIS’s Richie Hyden for more detail.)

Meanwhile Wurl just introduced something called BrandDiscovery, a product that uses AI to analyze the emotional tenor of what's happening on screen just prior to an ad break, so that brands can place their ads in an emotionally appropriate slot. Or, as we’ve been putting it, you don’t want your funny ad running right after the funeral scene.

NBCU and Disney have also rolled out new contextual targeting tools—Disney’s Magic Words, which has a similar functionality to BrandDiscovery, only on Disney properties, while NBCU’s product is a variation on IRIS TV’s deal library, only with first party data thrown in.

Point being, there’s suddenly a whole lot of action in contextual.

Why It Matters

It’s not like we were brilliant prognosticators in predicting that contextual was going to become the New New Thing. I mean don’t get me wrong— we are brilliant prognosticators, it’s just that this was not a particularly noteworthy example of it.

Because nearly everyone we spoke to in 2022, or at least everyone with vision, saw that contextual was going to be hot in the years ahead.

And that was because it solved so many problems that plagued streaming advertising at the time. Privacy, as I’d noted, was number one with a bullet.

Advertisers no longer had to rely on specious first and third party data sets and use them to track down viewers by their IP addresses and then make guesses as to who was actually in front of the TV set. 

They could just target viewers based on what they were watching.

Which is what advertisers did with TV for decades, until it became fashionable to think that they should target viewers like they did on digital.

The problem with that being that TV is a group activity and you have to make all sorts of guesses about who is in front of the TV. Whereas with contextual the “who” is not important. If someone is watching, they’re the target.

Transparency is another issue that contextual helps clean up. Whereas streamers did not always like to share where ads ran—they were worried about cherry-picking, among other things—with contextual, they are more than happy to share. (Okay, less unhappy.) That’s because where the ad ran, rather than who saw it, is what’s important.

There’s also brand suitability, which is the main reason brands like contextual—no worrying about the funny ad/funeral scenario. 

It’s good for streamers too, because they can sell ads against content like news that is often subject to a blanket blacklist. This is unfortunate in that much news content is either feel good stories or service pieces that are completely brand suitable and with contextual targeting, news—which is a huge growth area on streaming—can be advertiser friendly. 

But wait, there’s more!

Contextual also helps with reach (first party data sets are notoriously narrow) and overfrequency and, because it doesn’t matter who is actually watching, it can eliminate much of the angst over ID resolution, at least when it comes to TV.

So there’s all that, and it’s why we’re going to see a lot more contextual targeting on television, especially as AI gets better and more nuanced at scene detection in the years to come.

What You Need To Do About It

If you’re reading this and thinking that we’re going back to targeting Women 18-49 on daytime for laundry detergent and why would we do that when we can use data to target consumers on “CTV” so much more precisely… It's time to do some homework on the reality of streaming TV advertising and what I’ll call “The New Contextual.”

All that generative AI stuff you’ve been reading about makes the targeting way more precise and makes the ad feel far less interruptive, far more like it’s part of the show. Which is a positive development for both advertiser and advertisee.

If you’re an agency and you haven’t been giving your clients downloads on the power of contextual, you probably should start planning one stat. (And if you are the brand marketer, you should probably give them grief for being laggards.)

If you’re a network or streaming service, contextual targeting is a veritable gift for you. It allows you to avoid all of the issues around directly targeting specific users and creates a much better viewing environment for your users, as the ads fit in with the content, which makes everything seem far more seamless.

So a win for everyone.