How Roku aims to increase advertiser interest after adding users

Roku released its second-quarter earnings on Thursday, showing consistent growth in users but a slowdown in revenue since last year’s final quarter. The CTV company reported 14% year-over-year growth in active accounts, totaling an increase of 1.8 million active users to 63.1 million. Roku’s uptick in users mirrors the broader rise of free TV platforms. Subscription streamer Netflix, meanwhile, has recorded losses in its audience, and Peacock’s paid tier just revealed that its audience has remained flat. The company also shared in its shareholder letter that while its revenue has begun to grow after a first-quarter drop, it still remains over $30 million below its recent peak of $703.6 million from the fourth quarter of 2021. Subscribe to Ad Age Sign up now for the latest industry news and analysis Click here In an earnings call, Roku said it anticipates becoming a stronger programming competitor in coming quarters. It also hopes to increase viewer and advertiser interest by expanding licensing deals as well as Roku Originals, which will premiere the Daniel Radcliffe-starring biopic “Weird: The Al Yankovic Story” on Nov. 4. The company also plans further advances in shoppable ad products, such as an announced partnership with Walmart that will allow viewers to make purchases with their TV remotes; those purchases will be instantly paid for and shipped via pre-populated information. Roku also addressed the current economic climate. “There’s a lot of historical precedent for advertisers at the start of the recession or an economic downturn or in periods of extreme uncertainty, like the start of the pandemic,” said Roku Chief Financial Officer Steve Louden on a media call. “They effectively hit the emergency brake.” Roku pointed to current economic headwinds’ effect on advertising budgets as the main cause for its slowing revenue growth, specifically citing decreased buys in the scatter market, or short-term ad inventory. The company did, though, tout its $1 billion upfront take with 100% client retention—even in categories, such as automotive, that have experienced greater economic pressures. It also said that 25% of its upfront commitments came from first-time advertisers. Louden took pains to emphasize that the streaming revenue slow-down is “a macroeconomic factor” rather than a result of CTV hitting its peak. The CFO cited research from Nielsen and eMarketer that shows U.S. viewers between the ages of 18 to 49 committed 50% of their TV-watching time to streaming platforms, while only 22% of TV ad spends were devoted to streamers over the same period. “What you see then is roughly half of consumer TV time is now in streaming,” said Louden, “whereas on the advertising side, there's a lot of friction, there’s a lot of inertia there.” “Actually, macroeconomic issues like we have right now impact short-term spend, but it accelerates the conversation about maximizing ROIs and investing in growing audiences, not shrinking audiences like linear TV,” added Alison Levin, VP of ad revenue and marketing solutions at Roku. Ad Age Small Agency Awards See all of the 2022 winners Click here

How Roku aims to increase advertiser interest after adding users

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