Supply chain issues and high inflation have hit the ad industry hard. Snap (SNAP 0.26%) recently warned investors that it would miss revenue projections in the second quarter, and Meta Platforms (META 2.67%) has significantly reduced hiring plans in preparation for what CEO Mark Zuckerberg said "might be one of the worst downturns we've seen in recent history."

However, The Trade Desk (TTD 2.42%) and Walt Disney (DIS 1.09%) recently finalized a partnership that will allow advertisers to more effectively automate targeted campaigns across Disney-owned web properties. That bodes well for the broader industry, and it could turbocharge growth for both companies in the long run.

Here's what you should know.

The impetus behind the partnership

Advertisers have traditionally relied on snippets of code known as third-party cookies to collect consumer data for ad targeting. But Apple (AAPL 1.66%) has already eliminated third-party cookies from its Safari browser, and Alphabet's (GOOGL 0.83%) (GOOG 0.72%) Google plans to do the same with its Chrome browser by late 2023, effectively killing the technology that advertisers use to personalize campaigns. To make matters worse, Apple also changed its iOS privacy policies last year, requiring mobile users to opt in to tracking rather than giving them the option to opt out.

Collectively, that news has been a source of anxiety for many ad-based businesses. But The Trade Desk took charge and spearheaded the creation of Unified ID 2.0 (UID2), a new identity framework built on encrypted email addresses and phone numbers. While cookies were limited to web browsers, UID2 works across browsers, mobile apps, and connected TV (CTV) platforms. Better yet, the project has gained traction with a significant number of publishers, supply side platforms, and data providers.

The deal between Walt Disney and The Trade Desk builds on that foundation, integrating Disney's first-party data (i.e. information the company collected directly from users) with data captured by the UID2 framework. That means, through The Trade Desk, ad buyers can match their own data with Disney's to automate targeted campaigns across Disney-owned platforms. That includes the ad-supported tier of Disney+ set to launch later this year.

The potential impact of the partnership

Broadly speaking, this partnership has positive implications for the digital ad industry as a whole. It demonstrates that content publishers like Walt Disney can partner with ad tech companies like The Trade Desk to overcome challenges imposed by Apple and Alphabet. Going forward, investors should expect to see similar deals as advertisers work to cookie-proof their businesses.

This partnership should also be a tailwind for both Walt Disney and The Trade Desk. Ad targeting makes ad inventory more valuable for publishers, simply because advertisers are willing to pay more when they have data regarding the audience, as that data makes ad campaigns more effective. Disney+ currently operates at a loss, but this partnership could enhance Walt Disney's ability to monetize the streaming service once an ad-supported tier goes live later this year. Ultimately, that could accelerate the time to profitability for Disney+.

Similarly, The Trade Desk cites CTV advertising as one of its three largest growth opportunities, and there is a good reason for that. Total television ad spend will surpass $340 billion by 2026, according to IMARC Group. As streaming continues to displace traditional viewing options, more of that $340 billion should find its way to CTV platforms.

As the largest independent demand side platform, The Trade Desk was already well-positioned to benefit from that trend. But its deal with Disney could accelerate the shift of ad dollars to CTV, and it could incentivize more advertisers to utilize its platform.