In a move that will bolster Roku’s advertising capabilities, the streaming company has acquired Nielsen’s Advanced Video Advertising unit.
Terms for the deal were not disclosed. A person familiar with the transaction described is “not material” to the overall business of Roku, which is currently valued at $53 billion. Nevertheless, the acquisition is a meaningful step forward for Roku. The company will now be able to serve viewers “dynamically inserted” ads on live, linear programming.
Such brand messages are considered to be more relevant and less dependent on traditional demographic markers like age and gender. Nielsen’s automatic content recognition tools for video will also come under the Roku roof, giving the company another important tool to offer brands.
The deal comes as Roku continues to build on its formidable position in the streaming sector. Its connected-TV devices and smart-TV interfaces serving 51 million active user accounts by the end of 2020. The company has also found success with the Roku Channel, a free, ad-supported offering that now reaches households with 63 million people. While the company does not break out ad revenue as a discrete category, the migration of ad spending away from linear and toward streaming has helped propel the company to new heights.
Along with the transaction, the two companies have also formed a strategic alliance. Under that agreement, the companies will work to integrate Nielsen ad and content measurement tools into Roku’s streaming platform. Nielsen last December announced its plan to launch a new measurement offering, Nielsen ONE, in 2022. Nielsen ONE will combine linear and digital viewing into a single set of metrics.
Louqman Parampath, VP of product management at Roku, told Deadline in an interview that Roku and Nielsen have had an active relationship since 2015. That connection took the form of an outright acquisition instead of a partnership, he said, because of scale. “The technology has been ready,” he said of Nielsen’s DAI and ACR efforts. “What it has lacked is the reach and scale that Roku can bring to bear.”
Scott Brown, GM of audience measurement for Nielsen, said “addressable” advertising is a market worth about $3 billion today out of a total of $70 billion spent by all marketers annually on TV. But it is growing at a fast clip — more than 35% in 2020, with more upside ahead. Marketers who have seen results in digital understand the value of aiming ads not just at women aged 25 to 49 but at, for example, new mothers with an income of more than $100,000 who live in the Boston suburbs.
“This allows Roku to get into the addressable game in live, linear television,” Brown said. “Where we come in is we take our customer base — networks, ad buyers, agencies — they want to transact with our currency.”
Allison Levin, VP of ad sales and strategy at Roku, noted in an interview with Deadline that the “vast majority” of TV ad dollars are not targeted to anything beyond age or gender. “What we see on streaming is, over 95% of all of the buys we help clients place, are leveraging precise audiences and optimizing off of that based on the learnings they get on the measurement front.”
The deal, which follows Roku’s $150 million acquisition of ad tech firm Dataxu in 2019, is expected to close in the second quarter. After the close, Roku will onboard Nielsen AVA employees and take control of a sizable portfolio of ACR and DAI technology patents.
Under their strategic agreement, the companies will enter into a long-term commercial pact to leverage Total Ad Ratings on the Roku platform. Roku’s media sales and ad-buying platform, OneView, will natively integrate Nielsen “always on” Digital Ad Ratings (DAR) for advertisers. Roku will also let publishers implement Nielsen Digital Content Ratings (DCR).
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