Roku Makes a Big Investment in Better Ad Targeting

Illustration for article titled Roku Makes a Big Investment in Better Ad Targeting
Photo: Gizmodo

On Monday, Roku announced a new “strategic alliance” with the market research giant Nielsen, that sees the connected TV giant swallow Nielsen’s Advanced Video Advertising business—and take on two major pieces of ad-targeting tech in the process.

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The first is Nielsen’s so-called automatic content recognition (ACR) tech, which is engineered to track the movies, shows, and ads that are playing across a person’s screen—all in real time. The second is Nielsen’s dynamic ad insertion (DAI) tech, which will allow Roku to replace the ad slots you’d find during your average linear TV broadcast with “dynamically inserted” slots that better target viewers.

Here’s an example of what this might look like: let’s say I’m watching one of Roku’s many ad-supported linear channels, like—I don’t know—The Bob Ross Channel. Traditionally, ads playing on a channel would be targeted using pretty broad metrics, like the time of day a viewer is watching or the broadly inferred demographics of the typical Bob Ross channel watcher. What DAI does is swap out those ads for ones that are tailored to the viewer’s gender, age, and “advanced demographics” like their income level or shopping interests. Now I can be targeted with ads geared towards young adults who live in New York with their very fluffy cats. And the better a platform’s targeting is, the more advertisers will pay to put their product in that ad slot.

Over the past two years, Roku has made the shift from a hardware-focused company with a somewhat peripheral ad business to one that’s focused more and more on tracking and targeting its users. And that’s reflected in the company’s ad revenue over time: back in 2019, Roku announced that its earnings from its “platforms” business—which includes advertising—rocketed up 78% from the previous year, netting Roku $740 million of the company’s $1.1 billion dollar earnings. Per Roku’s most recent earnings call, those platform numbers are only continuing to climb, netting Roku a solid $1.26 billion dollars throughout 2020.

It’s also worth noting here that aside from the undisclosed chunk of cash that Nielsen was paid as part of the acquisition, Nielsen will also be getting a bevvy of consumer data from Roku’s new systems.

While the specific data being shared is unclear (see: proprietary), we do know that Roku will be integrating its ad-buying platform, OneView, with Nielsen’s Digital Ad Ratings System that, per Nielsen, lets advertisers track their ad’s performance across all of the screens someone has in their home, from connected televisions to mobile phones to tablets and laptops.

I cover the business of data for Gizmodo. Send your worst tips to swodinsky@gizmodo.com.

DISCUSSION

swanyswanson
SwanySwanson

SO.  My Roku is gonna be doing the same thing with ads now that facebook has been doing to people for well over a decade now?  Is that about right?