Dive Brief:

• Disney's Hulu is launching a direct response ad format to let viewers interact with commercials they see on the streaming service, it announced during its NewFronts presentation this week. GatewayGo lets advertisers use second-screen technologies like QR codes and push notifications to prompt viewers to respond to a call to action (CTA) on their mobile devices.
• Teeth-straightening service SmileDirectClub, luxury consignment store The RealReal and restaurant chain Sweetgreen are among the launch partners for GatewayGo. Six out of 10 viewers said would likely consider buying from a brand after redeeming an offer, while 50% of people have their phones with them while they watch TV, per survey data cited in the announcement.
• Disney on Oct. 1 will offer marketers a way to reach viewers among its entire platform of networks including Hulu with its Disney Hulu XP video ad-buying product. The company last week combined the advertising, technology and products teams for Hulu and Disney into a single ad tech team, Adweek reported. Disney announced the new services as part of the Interactive Advertising Bureau's NewFronts, which is a virtual event this year because of the coronavirus pandemic.

Dive Insight:

Disney's introduction of its GatewayGo platform on Hulu follows hints since last year that it would create a transactional ad format to help marketers with direct response campaigns, as noted by Adweek. With many marketers — especially direct-to-consumer (DTC) brands like SmileDirectClub — pushing for advertising that produces a measurable business outcome, Hulu's direct response ad format can help to drive viewer actions like visiting a website, downloading a coupon or making a purchase through their mobile devices.

Disney's data about device usage helps to support other research indicating that many viewers use their smartphones while they watch TV, opening up a channel for communications between brands and consumers and potentially encouraging direct sales. Almost three-fourths (71%) of TV viewers use a mobile device to look up something related to the TV content, while 41% said they text, email or message someone about the content, per Nielsen data cited by TechCrunch. Second-screening improves the viewer's chances of following up on an ad by 75%, significantly improving effectiveness, according to a study by media agency MediaCom and technology company ViewersLogic.

Hulu's introduction of a transactional ad format follows similar efforts by rivals like Comcast's NBCUniversal, whose Peacock streaming network starts service on July 15 after a limited release. NBCUniversal last year rolled out ads that let viewers use their smartphones to scan QR codes that pop up to indicate when a product is available for sale. During testing, the ads generated conversions were 30% greater than e-commerce benchmarks and growth rates 10% better than for social media, according to the company.

Direct response ads can help marketers immediately see how well their ads are performing based on the number of website visits and sales, even if the response rates end up being a fraction of the total viewing audience. A 1% response rate is common for email, social media and paid search campaigns, while online display ads generate a 0.3% response rate on average, per the ANA/DMA 2018 Response Rate Report.