Roku Inc.
ROKU
has further expanded into advertising with the launch of its own advertising brand studio, focused on producing new creative branded content formats and TV programming mainly for marketers.
The studio will add to Roku’s existing advertising offerings, which include sponsorships and native ads and create advertiser-commissioned short-form TV programs, interactive video ads, and other branded content on The Roku Channel.
To jumpstart its branded content business, Roku has entered into an agreement with digital comedy producer, Funny Or Die’s branded entertainment division. Chris Bruss, Funny Or Die’s former president of digital content and head of Gifted Youth commercial production company, will lead the new studio along with a group of producers, editors and writers.
Moreover,
Snap
’s
SNAP
Rachel Daly and Brian Toombs, former senior VP of branded content production at Funny Or Die will join Roku’s Patrick Colletto in leadership roles.
Roku plans to announce additional details of its ad studio and branded-content strategy, including partners and specific projects, at its 2021 NewFronts presentation on May 3, 2021.
Roku’s Efforts to Attract Ad Revenues
Roku is benefiting from advertising spend reallocation toward TV streaming as marketers accelerated their shift out of traditional TV and into TV streaming. During the fourth quarter, while retailers spent 7% less on traditional TV advertising year over year, retail advertising spend on the Roku platform more than doubled.
Moreover, monetized video ad impressions more than doubled year over year, as advertisers increasingly followed users from traditional pay TV to streaming. Product innovation in solutions like the Shopper Data Program with Kroger continued to drive growth.
Markedly, the six largest agency holding companies more than doubled their investment with Roku in the fourth quarter on a year-over-year basis, while also committing to significantly larger 2021 up-fronts with Roku.
On Mar 2, Roku announced a strategic partnership with
Nielsen
NLSN
to integrate complementary Nielsen ad and content measurement products into the Roku platform and further advance Nielsen ONE, the company’s cross-media measurement solution.
Additionally, Roku has entered into an agreement to acquire Nielsen’s Advanced Video Advertising business, which includes Nielsen’s video automatic content recognition and dynamic ad insertion (DAI) technologies. The acquisition will accelerate Roku’s launch of an end-to-end DAI solution with TV programmers.
Through the deal with Nielsen, this Zacks Rank #3 (Hold) company aims to benefit from the increasing spending on addressable TV advertising in the United States, which is expected to jump 75% from August 2020 to $3.6 billion by 2022, according to
eMarketer
.
Meanwhile, growing popularity of Roku’s OneView ad platform is a growth driver. The ad platform is designed to help advertisers use TV identity data to create ads across OTT, desktop and mobile from a single hub.
Markedly, the live content on Roku Channel is free to view in exchange for eight minutes of advertising time per hour. Roku sells the ad spots on an ad-spot bidding platform built around assets from ad specialist Dataxu, which Roku acquired for $150 million in 2019.
As of the end of fourth-quarter 2020, Roku users streamed 17 billion hours, up 55% year over year aided by deals to carry
Comcast
’s
CMCSA
Peacock and AT&T owned WarnerMedia’s HBO Max streaming services. The Roku Channel grew more than twice as fast as the Roku platform overall, on both streaming hours and active account reach basis.
Per management, The Roku Channel reached households with an estimated 63 million people in the fourth quarter. Moreover, the Roku platform was the most popular streaming platform with 41% share of streams, which is nearly equivalent to the next three platforms combined per a research by Conviva as cited by Roku.
We believe that Roku’s growing efforts to attract advertisers to its platform will drive top-line growth in the near term.
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