Roku sets its sights on linear TV ad dollars
Roku is releasing a new measurement tool Wednesday intended to show advertisers how many more people they could reach by shifting budgets from TV to over-the-top, or streaming internet TV.
“We’re working with partners, helping them understand and quantify how much viewing is moving from linear to OTT,” says Alison Levin, VP of sales and strategy at Roku. “So, brands can become whole again and find audiences they’ve been losing.”
The measurement tool works like this: It can analyze how many times a brand’s ad was viewed by Roku users watching traditional TV during a 90-day period. Then it can calculate how many more unique viewers the brand could have reached by advertising on its over-the-top streaming platform.
Over-the-top TV is a growing segment of the viewing audience, people who don’t watch through cable or broadcast TV, but stream video through devices like the one from Roku. In the U.S., 205 million people will watch some form of over-the-top TV in 2019, whether that’s through YouTube, Hulu, Netflix and others, according to eMarketer’s latest stats. The OTT market will grow 2.5 percent this year, eMarketer says, and reach 72 percent of all U.S. internet users.
Roku has a growing advertising business through its streaming video boxes that reach 29 million households, as of the end of last quarter, which was up 40 percent year over year, according to the company’s latest earnings report. Roku also expects to top $1 billion in ad revenue in 2019.
Levin says that studies show 30 percent of all TV viewing is happening through the internet, but over-the-top only captures 3 percent of the TV ad revenue.
Roku’s new measurement is just the latest example of how the company wants to use its connected devices to raise the value of its ad platform. The company is able to analyze the commercials viewed on 10 million smart TVs that use Roku software, Levin says.
Roku has already used this capability to do post-campaign reports for brands, after commercials run to show brands how they performed. For example, in a Baskin-Robbins campaign, 86 percent of 18- to 49-year-olds who saw an ad from the ice cream brand on Roku’s platform were unreachable through traditional TV, according to Roku’s analysis.
Similar results were found for a campaign from Re/Max.
Instead of just using this type of measurement after a campaign, Roku is hoping to show advertisers the same data before they set their TV plans, so they can be swayed to allocate more of the ad budget to its platform.
Roku is not alone trying to convince advertisers that it can tap into a unique audience that is increasingly alienated from TV. Facebook, YouTube and Amazon are just a couple of the major rivals also promising to capture audiences as they shift viewing habits.
Roku is promoting its measurement technique just after TV upfronts, when all the advertisers plan their media buys for the year with the major networks.