Roku Flexes OTT Ad Muscle

Growth in OTT advertising revenues is a given. But can you name a real, near-term fast-moving OTT grower in the space?

For many, it seems Roku, the big OTT set-top box device/platform provider, is it. Roku has dramatically morphed into selling big video ad time through a transitional OTT app emphasis and can be included on many smart TVs.

Roku gets more ad-related business revenues than from its set-top-box devices. Estimates from eMarketer show Roku will get to $433 million in ad revenues in 2019 (out of a total of $655 million, according to other estimates). In 2020, advertising revenues will climb to $632.9 million.

Much of this comes from its in-house, ad-supported Roku Channel -- as well as ad revenue coming from deals it makes with publishers for carriage of their apps. Roku says it has 27 million active accounts.

Helping out advertising results from its partners, Roku allows publishers to use its first-party audience data to boost their advertising efforts.



Supplementing all this business, Roku’s recent effort now allows users to pay for individual channels, starting with premium, ad-free networks like Showtime and Starz.

Now, all this would seem to be running headlong into big digital media companies: Google, Facebook, and Amazon.

The latter in particular seems to be a main point of competition. Amazon Channels has been growing since 2015 -- a platform where consumers can buy up as many individual cable and other networks.

But while Amazon Channels steadily grow, they don't have what many traditional pay TV providers do -- all-you-can-eat services that can offer around 200 channels.

All this would seem to suggest -- for the near-term, anyway -- plenty of room to grow for both Amazon and Roku.

Long-term? Well, it would be hard to bet against Amazon. It is not willing to surrender any consumer-facing product/service business -- especially in-home TV entertainment.

Amazon would seem to have the long-term advantage here -- especially with ad-supported channels where it can marry ad-inventory from deals with networks/publishers with its ever-expanding ecommerce/consumer activity, where advertisers/brands have a direct connection.

Still, is this the whole story? Many media analysts believe niche digital media services can succeed. Would this segment of the media business be one of those? 

1 comment about "Roku Flexes OTT Ad Muscle".
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  1. Ed Papazian from Media Dynamics Inc, January 24, 2019 at 8:53 a.m.

    While our  hat would be off to ROKU---if we had one--- for its ad revenue gains, one must ask whether with so many new ad-supported options springing up, will all of these succeed? It's fine to assume that all of the ad dollars will come from "pay TV"---which, we are told---is doomed. But are all advertisers really  marching to the selective targeting tune? Or are many perfectly happy with low CPM TV audience tonnage buys made on a corporate, not a brand by brand basis? Stay tuned.

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