Roku Offers Guarantees to TV Advertisers

Roku to base guarantees on Nielsen Digital Ad Ratings, tap into currency used for traditional TV advertising
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Claiming that it’s closing the gap between OTT and traditional TV ad measurement, Roku on Monday introduced audience guarantees for TV advertisers that are based on Nielsen Digital Ad Ratings (DAR).

Roku, which claims to be the first OTT platform to offer such TV-style guarantees for certain audience demographics, said the new option allows it to sell ads using the same kind of currency that’s used for more traditional TV advertising.

Instead of buying based on impressions, those advertisers will be targeting their buys to target certain demos. For example, a TV buyer could tap into that data on a guaranteed basis from Roku to target adults who are 18 to 49, explained Scott Rosenberg, VP of advertising at Roku, which timed the announcement in concert with this week’s 4As Transformation conference in Los Angeles.

The intro comes about two years after Roku and Nielsen forged a partnership to measure demographics on the Roku platform. Last October, Roku struck a similar kind of deal with comScore.

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“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,” Rosenberg said.

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

“Roku is pushing the industry forward to adopt verification standards for media buying,” Britney Greenhouse, director of video and digital investment at Horizon Media, said in a statement. “We have been working together with Roku to pilot the audience guaranteed product. We’ve seen positive match rates with Nielsen which are a good sign.”

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

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

Roku also offers more targeted advertising options that’s still core to that part of its business. “But the vast majority of TV advertising isn’t spent that way yet,” 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.”

Advertising is a growing segment for Roku. The company pulled in nearly $400 million in total revenues in 2016, with about $100 million coming way of its Media and Licensing segment, which includes advertising sales.

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Though the bulk of Roku’s revenues comes from devcie sales, the profit contribution from the media side of its business is greater.