Scott Rosenberg and the team at Roku are on a mission. Their goal? Not just to improve revenue and performance results for their partners and advertisers, but to fuel excitement about and usage of the entire OTT (over-the-top) ad ecosystem. In this interview Rosenberg, Roku’s General Manager and Senior Vice President of Advertising, discusses the types of advertising his organization sells, how it’s measured and why brands and TV buying teams at agencies are increasingly turning to Roku and OTT for traditional television campaigns.
Kathy Newberger: Tell us about Roku's media business. What are the products you are selling?
Scott Rosenberg: One part of our media business, what we call the platform business, is audience development with our content partners -- helping companies with Roku apps build their audience. The other part -- the faster growing part -- of the platform business and the OTT business in general is 15- and 30-second spots in more traditional ad-supported viewing. Today we’re working with a majority of national advertisers in every vertical, all the big agency holding companies, and are active across every ad category.
Of the many products within the ad-supported side of the business, the best-selling product is demographic guarantees; when an advertiser wants to reach women 18-49, for example. When we first started down this path, folks said, “Well, isn’t everybody moving away from the Nielsen demo?” Certainly, we sell all those advanced campaigns -- but right now, today, there’s 70 billion dollars spent every year against that Nielsen age/demo currency. So, we can go right to the person responsible for a TV budget at an agency and say, "Your audience is migrating out of linear, your reachable universe is shrinking year over year. They're moving to OTT, they are predominately on Roku and moreover, we can offer you the very same currency that you buy against in television today.” It’s a huge win.
The difference from traditional TV is how much else we can do. We can target based on demographics or viewing patterns, and advertisers can bring their own first-party data and match that to our universe. We can do look-alike modeling. We also sell interactivity. So, we'll sell an auto ad that viewers can click, it pauses the thirty second spot, and they can go in and interact with a photo gallery of the car or get a text message from a local dealer.
Newberger: What about data?
Rosenberg: Measurement is the huge thing for us. We have log-in data and know exactly who's been exposed to an ad, and we’ve struck partnerships with companies like Placed, and Nielsen Catalina, and Millward Brown, where we can benchmark the impact of our ads up and down the marketing funnel and look at whether exposure to a video ad increased perception of the brand, purchase intent, store visits or sales lift.
Newberger: There was quite a bit of coverage after your recent earnings call about how important the advertising business is to Roku as a whole. Can you talk about reach and revenue?
Rosenberg: We disclosed that we've now hit 16.7 million active accounts. That’s accounts, not devices. Some Roku users have more than one device, and we would count them as a single account. For context, if we were an MVPD, we’d be fourth in size after Comcast, AT&T/DirecTV and Charter.
Advertising is about two-thirds of our platform revenue, the other third being related to the content side of our business, where we typically get revenue shares on subscriptions and transactions. Ad-supported viewing is over 40% of viewing on our platform today, and growing faster than the subscription and transactional parts of our viewership.
Newberger: Roku is doing groundbreaking work. Any thoughts on OTT as a category?
Rosenberg: Whenever you're out offering a new media, you've got to prove that media works harder, performs better than all the other dizzying array of choices where marketers can plunk down their money. The fundamentals of OTT are fantastic. I've worked on a lot of media in my career, a lot of propositions. The promise, the opportunity around OTT is really all the power of a TV ad, blended with all the power and benefits of digital.
When we first started [in 2012] there was a resistance to the idea that OTT advertising was important. Today, everybody acknowledges that ratings are down and cord cutting is up, especially in younger demos. We now have great research that shows we can deliver 10% incremental reach over a linear TV ad buy. We view our mission here to elevate the state of the media. The industry is moving way faster than any of us might have thought possible just a few years ago. It's amazing how big the tidal wave is of consumer habits changing. And advertisers are following their consumers.
For Roku, it’s an ecosystem play. I think a lot of folks think of us as just another media sales team. We view our job as bigger than that -- as making these things possible, not just for our own ad sales team but for content owners on our platform.
I think the main thing we try to communicate to the market place is genuine excitement. That the future is here. I think the TV business is coming online. It's got dial tone; all the stuff we've learned is possible in digital is coming to TV. It's a huge market. I just think it's one of the best places to be.
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