• by Alex Weprin , June 27, 2018

Roku is seeking to expand the targeted advertising business on its platform in a significant way, launching what it is calling the Audience Marketplace.

The Marketplace will combine Roku’s own proprietary audience data and technology with trusted third-party data to allow publishers to sell to targeted audiences on the Roku platform. Both programmatic and direct-selling methods will be supported by the marketplace. 

Essentially, Roku is opening up to publishers the first-party datasets it has used to sell addressable ads, and tying those datasets to third-party or other proprietary data. Roku is partnering with the supply-side video ad platform SpotX to integrate its data, and to ensure user privacy is protected.

Roku believes its size (around 21 million households) and its focus on premium video will allow its ad marketplace to add value to the overall OTT video market.

“In order to do addressable properly, you really need to have scale,” Seth Walters, vice president of demand partnerships at Roku, told reporters at a press conference Tuesday.

Turner, Viacom and 21st Century Fox will be among the first publishers to use the marketplace.

While Roku was founded as a manufacturer of streaming video hardware, it is the company’s platform business — which includes advertising — that has seen the most explosive growth, becoming its biggest revenue driver. Last quarter, platform revenue was $75.1 million, up 106% from the same quarter last year, while its hardware revenue was $65.1 million, down 3% from the same quarter last year. 

Roku’s platform supports ad-free streaming services like Netflix and Amazon Prime Video as well as free ad-supported services like Pluto TV and authenticated TV apps like those offered by many TV channels. It also has a channel of its own, Roku Channel, that is free and ad-supported.

“When we started the Roku ad business in 2014, we had a big, hairy, ambitious goal of reinventing TV advertising. If that sounds a little messianic to you, that’s because it was,” Scott Rosenberg, general manager of Roku’s platform business, said Tuesday.

“We really felt that OTT, much more so than legacy TV platforms, was the place to go to reinvent how TV advertising works, and really deliver on this promise of bringing the sight, sound, motion and branding power of TV, combined with the benefits of digital, targeting and engagement."

Now, with the Audience Marketplace, Roku believes it is one step closer to fulfilling that vision, even if targeted addressable advertising continues—for now — to play second fiddle to linear TV advertising.

“At Roku we believe that the future of TV is streamed. When all TV is streamed, then all TV ads are streamed,” Walters says. "So what happens when all TV ads are streamed? They can be targeted, they can be measurable, and they can be interactive, so that is a lot of value we can create for this ecosystem.”