Disney is using artificial intelligence to create a new advertising tool called 'Disney's Magic Words' that allows brands to tailor their commercials to fit the mood of specific scenes within movies and TV series on the Disney and Hulu streaming services. (REUTERS)AI 

Walt Disney utilizes AI to stream ads that match the ambiance of specific scenes, revolutionizing the game.

Walt Disney is utilizing artificial intelligence to develop a novel advertising tool that enables brands to customize their commercials according to the atmosphere of particular scenes in movies or TV shows.

Called “Disney’s Magic Words,” this tool introduces a new kind of contextual advertising for Disney and Hulu’s streaming services. It uses a combination of artificial intelligence and machine learning to analyze and tag scenes in its library and identify content, brands, images and mood.

Brands can use these descriptive tags, known as metadata, to identify a particular scene or mood and then tailor messages to match.

“It means leaving the broad Demos (demographics) behind and buying specific audiences,” said Geoffrey Calabrese, chief investment officer at Omnicom Media Group. “These magic words are literally able to connect me with consumer emotions on an audience level. And for us, that’s a real game changer.”

Omnicom is one of six global advertising companies participating in an early beta test of this ad product, Disney told Reuters. Other beta partners include Dentsu, GroupM, Horizon Media, IPG Mediabrands and Publicis Media. The company announced the new advertising features last month at the Consumer Electronics Show in Las Vegas.

Rita Ferro, Disney’s head of global ad sales, said the feature allows advertisers to maximize the impact of their messages “because it resonates with concepts experienced by viewers.”

Disney is investing in streaming ad technology as advertisers move away from broadcast and cable TV with viewers. The company’s ad revenue fell nearly 3% in the first quarter of 2024 to $3.35 billion, according to LSEG, reflecting a drop in traditional TV viewership. Researcher eMarketer estimates that Disney’s turnover last year was around 790 million dollars.

Disney does not report its advertising revenue.

CEO Bob Iger told investors during the company’s quarterly investor call Wednesday that the ad-supported version of the Disney service has attracted more than 1,000 advertisers in the first quarter, a tenfold increase since launch.

“Our revolutionary approach to technology ensures that our entire streaming portfolio will be the ultimate destination for brands for years to come,” Iger said in a statement to Reuters.

Half of consumers who subscribe to Disney choose a cheaper version of the service that includes advertising, said Joe Earley, director of Disney’s direct-to-consumer business. He said the company has spent years refining advertising technology designed specifically for streaming. Its Hulu service was launched in 2008 as a free ad-supported service.

“Disney didn’t have to step up,” Earley said. “It hit the ground.”

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