How a Surprising Partnership Between Disney and Walmart Highlights the Future of Digital Advertising | The Motley Fool (2024)

Digital ads are getting an important upgrade.

On May 8, a news release confirmed a partnership between two seemingly unlikely candidates: The Walt Disney Company (DIS -0.12%) and Walmart (WMT 1.00%). The former is one of the great media companies; the latter is the world's largest retailer. And yet, the two can help each other out when it comes to digital advertising.

Despite taking market share from traditional advertising for some time now, digital advertising has still struggled to "close the loop." And this is the problem that Disney and Walmart intend to solve.

What is the "loop" that needs closing?

With traditional advertising, data on engagement and efficacy is hard to collect. There's often no way of knowing who saw an ad and if it made any difference.

Digital advertising is a step up. Internet browser histories, social media, and more can all be used to tailor which ads get shown to which people. But it often still shares a shortcoming with traditional advertising: An advertiser can't be sure a person did anything after viewing an ad. It's hard to tell if the right consumers are being targeted.

Consumer-packaged goods (CPG) companies (like Procter & Gamble) sell products through Walmart. For its part, Walmart has customer data available. Now, the CPG company can pick which Disney audiences should be viewing its ads, based on Walmart's shopper data.

When sales data connects to marketing data, it's known as closed-loop advertising, and it's a big deal.

How both companies are focused on the trend

For years, Disney has exclusively used supply-side advertising platform Magnite to help sell digital ad slots for its streaming services. Disney dived deeper into ads at the end of 2022 when it added an ad-supported tier for its popular Disney+ service.

Earlier this year, Disney took another step forward by partnering with Alphabet's Google and demand-side platform The Trade Desk to increase advertiser demand on its streaming services.

Walmart has also been quietly focused on digital advertising. The company generates $100 billion in annual e-commerce sales now, giving it a large digital platform that was able to generate $3.4 billion in advertising business in fiscal 2024 (ended Jan. 31). Management expects ongoing growth in advertising to be an important profit driver in coming years.

Both Disney and Walmart are growing their respective digital advertising businesses, and by working together, they can mutually benefit.

This is the future

The Walmart and Disney partnership is the perfect example for where this space is headed.

Advertisers want the loop closed so they can use their limited advertising dollars with greater precision and a better return on their investment. Retailers such as Walmart are happy to leverage consumer data they already have to make more money. Media companies such as Disney also want to maximize revenue per ad slot. Making ads more effective through consumer-shopping data is a way to do that.

To be clear, the Walmart and Disney deal isn't the industry's first marriage of media and retail. Walmart already made a deal with connected-TV platform company Roku (ROKU 0.31%) to make ads shoppable in 2022.

Indeed, Roku is actually ahead of many of its competitors when it comes to closing the loop for advertisers. Not only does it have Walmart as a partner, it also signed a deal with grocery chain Kroger in 2020. Then, in 2023, it secured a deal with Cox Automotive, owner of the popular Kelley Blue Book website.

Roku can close the loop for grocery purchases as well as vehicle purchases. With its existing deals and potential deals in different product categories, Roku is putting itself in a position to increase what it charges for ads.

Disney will now be able to close the loop for certain kinds of purchases at Walmart, and the media giant should end up making more announcements like this. In the fiscal 2024 second quarter, Disney's streaming services were finally profitable, and advertising likely played a part in this.

Media companies partnering with retailers to close the loop and optimize their advertising is a strategy investors should expect to see much more of in the future.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Jon Quast has positions in Magnite and Roku. The Motley Fool has positions in and recommends Alphabet, Magnite, Roku, The Trade Desk, Walmart, and Walt Disney. The Motley Fool recommends Kroger. The Motley Fool has a disclosure policy.

How a Surprising Partnership Between Disney and Walmart Highlights the Future of Digital Advertising | The Motley Fool (2024)


What digital and social media marketing trends would you recommend that Disney+ implement to stay ahead of the competition? ›

To stay ahead of the competition, Disney+ can implement the following digital and social media marketing trends: Influencer Marketing: Collaborating with influencers who align with the Disney brand can help reach a wider audience.

Where does Disney advertise? ›

Disney generates advertising revenue across all video content platforms it operates, including linear TV, such as ABC TV stations or National Geographic, connected TV (CTV), and streaming services, such as Disney+, ESPN+, or Hulu.

How does Disney use digital marketing strategies successfully? ›

By employing tactics such as emotional advertising, cross-promotion and synergy, and strategic content distribution, Disney ensures that its messages resonate with consumers and reach them through various touchpoints. As a result, Disney maintains its position as a global leader in the entertainment and media industry.

Why is social media important to Disney? ›

Besides just using social media as a way of spreading information, sharing products and getting things out to consumers, they also use it as a listening device. A big factor that makes Disney so successful on social media is that they listen and take recommendations on board, to help expand and improve the brand.

How does Disney+ promote itself? ›

As you may have encountered before, especially Disney+ content is mainly promoted within other Disney properties like movies, TV shows, and theme parks. Trailers for new Disney+ shows or movies are often played on social media channels.

Why is Disney putting ads? ›

Disney+ offers a variety of different subscription options. By including ads in our streaming library in some plan options, Disney+ is able to offer different subscription options to fit a variety of budgets and entertainment needs.

Who is Disney plus advertising partner? ›

Disney Advertising is teaming up with Google and The Trade Desk to expand its Disney Real-Time Ad Exchange (DRAX). The partnerships mean that users of Google's Display & Video 360 and The Trade Desk can directly access streaming inventory on both Hulu and Disney Plus through DRAX. Why we care.

What is the social media strategy of Disney plus? ›

Apart from the daily posts, Disney's social media strategy involves sharing content that will engage the followers and make them comment on the posts. Disney also aims to keep its fans engaged by sharing content strategically for different types of audiences.


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