Google Announces Major Ad Partnership With Disney

In a big score, Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary Google today announced a new ad partnership with media giant Walt Disney (NYSE:DIS). The companies note that people now watch TV from just about any device in any location, and Disney has an unrivaled catalog of content, as well as distribution channels.

This article originally appeared in the Motley Fool.

Google Ad Manager, the search giant's simplified platform that combined DoubleClick for Publishers and DoubleClick Ad Exchange earlier this year, will power Disney's video and display ad business.

Disney has a massive audience to advertise to

In a blog post, Google Chief Business Officer Philipp Schindler says Google Ad Manager will be Disney's core ad tech platform from here on out. That will include live streaming, as well as direct-to-consumer (DTC) offerings like ESPN+. The company launched ESPN+ earlier this year, priced at $5 per month while including ads, and already has over 1 million paid subscribers. Disney said earlier this month that Disney+ will launch in late 2019, but that service is not currently expected to have ads.

Google will supplant Comcast's ad tech subsidiary FreeWheel, which it acquired in 2014 for $360 million. Disney contemplated building or acquiring its own ad tech but ultimately decided to partner with Google, according to Variety. Disney has a massive digital audience globally across all of its properties, estimated at around 230 million viewers.

The partnership does not include Hulu, which Disney currently has a 30% stake in. That stake is about to jump to 60% once Disney closes its pending acquisition of Twenty-First Century Fox (after completing some divestitures that Disney agreed to), thanks to Fox's 30% stake in Hulu. That deal is expected to close within the next couple of months.

Disney and Google will work on improving ad experiences across devices, which will also naturally bolster ad-targeting capabilities. "Disney will be able to serve video ads effortlessly on the web, in mobile apps, streaming through connected TVs and for live events," according to Schindler.

The deal is the latest development in Disney's ongoing shift to DTC offerings. CEO Bob Iger reiterated on the earnings call this month that DTC is "one of our top priorities." ESPN has been bleeding subscribers for years as cord-cutting has raged on and consumer preferences shift toward over-the-top (OTT) services. Advertising is a critical piece of the monetization strategy for ESPN+ as well.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Walt Disney. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Walt Disney. The Motley Fool has a disclosure policy.