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Roku Gives OTT a TV Moment

Streaming firm’s ad guarantees ‘a bit of a watershed’ for digital measurement 4/10/2017 8:00 AM Eastern
Scott Rosenberg, Roku VP of advertising: “We’re stepping it up significantly, using our data science to guarantee delivery to a target demo.”

Roku’s move last week to offer linear TV-style audience guarantees to advertisers could prove to be a big moment in the evolution of over-the-top video.

“When it comes to measurement, it’s a bit of a watershed,” Tim Hanlon, founder and CEO of The Vertere Group, said. “It speaks to the pure volume of OTT video that is being distributed and consumed out there.”

Hanlon’s comments came in the wake of Roku’s announcement last week that it had introduced audience guarantees for TV advertisers based on Nielsen Digital Ad Ratings (DAR).

Roku, which claims to be the first OTT platform to offer such guarantees for certain audience demographics, held that the move closes the gap between over-the-top and traditional-TV ad measurement.

Hanlon said he agreed with that view, to a large extent, given Roku’s leading position in the world of online video. “They probably know and see more viewing behavior from consumers than anybody in the OTT space,” he said.

SCALING UP
Roku has managed to achieve some scale for its streaming platform. At last check, Roku had 13.4 million “active accounts” and a user base that streamed 9 billion hours of video for all of 2016.

Roku generated about $400 million in total revenue last year, with $100 million of that coming from its Media and Licensing segment — the company’s biggest profit center — which includes advertising sales.

Under Roku’s guaranteed plan, advertisers can target their buys to reach certain demos, rather than basing their buys on impressions. For example, a TV buyer could tap into Roku data on a guaranteed basis to target 18-to-49-year-old adults, Scott Rosenberg, Roku’s vice president of advertising, said.

The intro comes about two years after Roku and Nielsen forged a pact to measure demographics on the Roku platform. Roku struck a similar kind of deal with comScore last fall.

“We’re stepping it up significantly, using our data science to guarantee delivery to a target demo,” Rosenberg said. “This is the currency by which almost all TV advertising [dollars] are spent, and we’re effectively making that same currency available in OTT.”

Roku holds that its approach will help advertisers use TV-based metrics to reach consumers who’ve cut or shaved the cord, or who have shifted their viewing of TV services to Roku’s streaming platform. Ad-supported viewing is the platform’s fastest-growing content segment, according to Roku estimates, accounting for about half of the top 250 most-watched “channels.”

The digital nature of Roku’s platform, which is census-based rather than sample-based, offers a more accurate way to predict and optimize for audience demographic and eliminate waste, Rosenberg said.

Roku will offer those TV-style ad guarantees via the hundreds of channels comprising its Audience Network, including inventory for pure play OTT apps, TV Everywhere apps and even apps from MVPDs. That’s all rolled up into an aggregated audience, with Roku offering guarantees for demographic delivery.

Roku also offers more targeted advertising options that remain core to that part of its business.

FINDING COMMON CURRENCY
“The vast majority of TV advertising isn’t spent that way yet,” though, Rosenberg said. “We also want to be able to serve the teams that know they need to be investing in OTT audiences, but want that common currency.”

Roku’s latest ad move also comes as OTT and IP streaming start to replace how some consumers are watching TV and to pose a challenge to the legacy ecosystem, Hanlon said.

The discussion is now shifting to how programmers, advertisers and distributors can exploit and monetize this growing platform. That, Hanlon reasoned, will now shift to how digital and TV metrics can work together and get measured in a hybrid, more unified form.

“To me, it’s another step in equating or harmonizing TV viewership with streaming video, or OTT,” Hanlon said. “And, ironically, that’s the joke. They’re melding into becoming the same thing.”

Though Roku has taken an influential step in the area of TV-style measurement for advertising, Hanlon expects other streaming platforms to get involved in the discussion.

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