Roku has a new data platform for brands to target ads to viewers through a clean room, which could help the connected TV player in its quest to become a more potent automated video advertising hub competing with the likes of YouTube and The Trade Desk.
Roku has been rolling out more advertising products in recent weeks, during a pivotal moment for the business, since one of its long-time ad leaders Scott Rosenberg announced in January that he was leaving after a decade with the company. In May, Roku will host its first in-person NewFront presentation following two years of virtual presentations in the wake of COVID-19. Ahead of its presentation, Roku’s advertising sales team outlined for Ad Age its roadmap for the coming year, including the development of the “data clean room.”
Clean room technology has become a popular advertising offering to target ads online, and increasingly in connected TV, as cookies and device IDs fall out of vogue. Meanwhile, Roku also has launched a slew of new ad products, including dynamic linear ads, which place commercials into traditional TV—Roku won’t just serve ads into streaming apps but will also insert them into live TV through broadcasting partnerships with programmers such as AMC Networks and Discovery.
Roku’s advertising push is all part of a revamped sales strategy to assert itself in connected TV. The company also reorganized its ad sales team to focus on verticals like auto, consumer products and apparel instead of breaking the team up by regions.
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The clean room is designed to allow advertisers and agencies to use their data to plan, buy and measure campaigns on Roku, said Louqman Parampath, who leads product management around ad products at Roku. “It all adds up to giving advertisers more options, and more ways to use data, and more sources of inventory,” Parampath said.
Roku will also be out in the marketplace discussing its original shows, content partnerships, brand integrations, e-commerce and retail marketing products, and its OneView demand-side platform, which is the programmatic ad management platform for media buyers. The clean room is a sign of how Roku is trying to become a more formidable player in connected TV, as rivals such as Disney and NBCUniversal have also developed such data products.
Clean rooms are computing platforms for publishers to share insights about their audiences for use in planning ad campaigns, and brands bring their consumer data to match it with the audience. In Roku’s case, it has information on 60.1 million subscriber households, their viewing habits and billing information; Roku also has relationships with retailers like Kroger, which helps with supplemental shopper data. Clean room technology is becoming popular in internet advertising as cookies and device IDs lose favor because of privacy concerns. The clean rooms are supposed to provide a way to comingle data sets in a privacy-friendly manner. Connected TV platforms and publishers, such as Disney and NBCU, are latching onto clean rooms as one of the keys to building digital ad businesses that could rival Meta, Google and Amazon.
“Roku is getting set up at the agency and holding company level” with its clean room, said Brad Stockton, senior VP of U.S. national video innovation at Dentsu, “and creating data interoperability is a really big thing that we’re seeing from them, that they’re really pushing us to get to a good place with.”
Roku wants to be the full-service connected TV platform, one that brands use to plan their ad campaigns and to measure the performance of media. By virtue of Roku's position as an operating system, one that sits on top of all the apps that are part of its ecosystem, it has a front-row seat into audiences' viewing habits. Roku helps brands track their ads and how often they run, and it helps manage the frequency of serving the ads, which is an important feature for TV ad buyers that don't want to oversaturate the market with their messages.
The connected TV space is in a moment of flux, too, with media giants rushing to offer ad-supported video to the living rooms. Disney, WarnerMedia, NBCUniversal, Amazon, YouTube and others are all competing. And internet advertisers are looking for answers to problems like measurement, which is in the midst of an upheaval in part due to issues surrounding Nielsen. Media buyers are looking for new currencies with which to buy digital video, that aren't just reliant on Nielsen's longtime dominance in the space. And marketers want to target ads, but not be reliant on cookies, which are going away as they are being phased out. All of these changes have left an opening for companies like Roku.
Roku said that already some of the major agencies are testing the clean room, including Omnicom Media Group, Dentsu, Horizon Media, Icon Media Direct and Camelot. “They’re making it clear that they have capabilities in this space so that we'll be able to reach the audience that we're trying to reach.” said Molly Schultz, senior VP of integrated investment at the agency UM.
Read more: Everything to know about data clean rooms
The upfront seasons is a crucial time for TV networks and the growing streaming players, like Roku. In some cases, like with Disney, media companies play in both areas, promoting TV during upfront negotiations and digital streaming during NewFronts. The IAB set NewFront week for May 2 to May 5, and upfront talks are slated for the week of May 16, but media companies are already holding meetings to lure marketers with their latest ad products.
Since 2020, especially during the COVID lockdown, Roku had been on a strong growth trajectory, riding the surge in viewership in connected TV. Roku had 40 million active accounts at the end of the first quarter of 2020 and has since shot up to more than 60 million. Roku also generated $2.3 billion in revenue in 2021, an 80% increase year over year. In 2021, Roku had said the number of “upfront commitments,” when brands commit ad dollars to the service, doubled, and that the total number of advertisers grew more than 20% year over year.
However, Roku also is facing more competition as Disney+, HBO Max, Paramount+, NBCU’s Peacock and other streaming media companies open more ad-supported video on demand. Disney+, for instance, is set to introduce its first commercials this year in a cheaper tier of its subscription app, which features hit shows like “The Mandalorian.” Roku also competes with Amazon, which will start streaming Thursday Night Football exclusively this year, and YouTube is still the largest ad-supported streaming app.
Brands are taking note of all the streaming digital media and making it a greater part of their media spending. A spokesperson for Hyundai, for instance, told Ad Age that its planned media mix in the video upfront will grow 56% from 2019 to 2023. The Hyundai spokesperson declined to say exactly what it commits each year in upfront ad dollars.
Dentsu's Stockton said that Roku’s data strategy could help the platform compete with other prominent programmatic video platforms like Google’s Display and Video 360, The Trade Desk and Yahoo. The clean room is one component for Roku, where brands could use data to directly identify the consumers they need to reach, helping guarantee views. The more audience an advertiser reaches, the more likely they are to spend with Roku, Stockton said.
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Roku also is using NewFront pitches to create new partnerships through its brand studio, which it launched last year. Dan Robbins, VP of ad marketing and partner solutions at Roku, said the studio was designed to go “beyond the 30-second spot” with ads. Brands are able to become more integrated with some of the programming on The Roku Channel, for instance.
“We’re really focused on interactivity and commerce,” Robbins said.
The commerce part is going to be key, too, considering retail media is becoming a major driver of digital advertising. Amazon has shown the power of combining shopper data and marketing to target ads and track sales. More traditional retailers, like Walmart, Target and Walgreens, are developing similar ad programs to help brands. Roku is utilizing its relationship with Kroger to develop a commerce side to connected TV.
Media partners like Roku can help brands by applying retail data to target people in the absence of cookies and to tie it to e-commerce strategies, UM's Schultz said. “Retail data is useful because it’s tied to [consumers’] wallets,” Schultz said. “So, you’re getting pretty accurate information.”