Roku Data Cloud Arrives—Is Data (Finally) Becoming More Transparent?
Roku reported their Q4 2024 earnings last week and the numbers show they had a good year and are now planning on how to bring more value to media partners and advertisers. They reported a gross profit of $1.8 billion, up 19% year over year (YoY). Streaming is up 20%, bringing Roku to 89.8 million streaming households and adding 9.8 million new households. They have an average revenue per unit (ARPU) of $41.49.
Their shareholder letter said, “In Q4, advertising activities grew faster than Platform revenue and outperformed both the overall ad market and the OTT ad market in the U.S. The YoY growth of the Political, Auto, and Retail ad verticals were up on the Roku platform.”
“We are really 50% of the streaming advertising ecosystem,” says Miles Fisher, Sr. Director, Global Ad Platform Partnerships & Business Development at Roku. The company reports that one out of every two CTV impressions is served on one of their devices.
Now Roku is betting on their Data Cloud to provide better, more targeted advertising for media, agencies, and brand customers and more valuable advertising budgets to Roku.
Here is my interview with Fisher, edited for space and clarity.
Krefetz: Why create the Roku Data Cloud?
Fisher: There’s been this consistent cry about not having the right signals. This comes from agencies who are planning media without transparency, buying platforms that don’t have good insights into who the consumer is, and measurement platforms built off of legacy datasets like IP addresses, which are continuing to churn. Most measurement companies are based off of the Inscape file from Vizio which is only 10% of the market, 0% of the Roku consumer.
Krefetz: You’ve had this data since you started, why now?
Fisher: The way that [media partners or agencies] used to get it was by using our DSP and our ad platform. Now we’re making it available through the Data Cloud via our Clean Room to look up insights and build segments that makes it more interoperable with the ecosystem to enhance data identity and targeting; doing identity syncs with partners, giving them access to ACR, IP address, and identity.
Krefetz: Is it all or just some DSPs?
Fisher: Just some. We’re starting with permissioning Yahoo at an advertiser level. Something that’s really important to us and our strategy is not to be disintermediaried, [so we] become just a data vendor. We’ll enable it with Yahoo through select advertisers that are customers of both Roku and Yahoo—GM, Papa John’s, and Inspire Brands. We’ll probably continue to roll that out with other large DSPs over time, like the Trade Desk, DV 360, and Amazon.
Krefetz: What data is associated with which phase of the marketing cycle?
Fisher: The three key phases of the marketing cycle are planning, activation, and measurement. Most planning today is led by agencies and they have their own planning tools. We’re doing integrations. The initial ones we announced were Omnicom and PMG, giving them an understanding of who is watching and when so that they can plan media.
The activation element is the DSP partnership, starting with Yahoo. We know if somebody is a binge watcher or a heavy sports fan, or they like to watch cooking shows. Those type of segments and categories are important to advertisers as they’re planning.
The last phase is measurement. How do we take the campaign viewership data, take our insights data and send that to the measurement partner so they could say, “Hey, Nadine—or a profile like Nadine—was exposed to this,” and then when Nadine buys something at Target, Target has that purchase data. But they’re the ones who are matching that together.
Krefetz: Run me through measurements.
Fisher: There are two types of main measurement that advertisers really look for. There’s reach and frequency like with the traditional TV measurement partners, iSpot, VideoAmp, comScore and Nielsen. Then there’s attribution, like Google’s ad server and TransUnion.
We’re focused on partnering to make their solutions understand the value of streaming—to understand user behavior engagement and the data and the attributes that are happening on the Roku operating system. We’re also enabling them to measure more down-funnel—site visitation, purchase behavior. They get those signals from the advertiser, but because of our breadth and depth, they can match that back to impressions and performance.
Krefetz: Is the Roku Data Cloud different from something Disney or Netflix would provide in terms of measurement and data?
Fisher: The biggest differentiator is they are publishers. Disney and Netflix operate on our platform. The insights that we see are across all of streaming and not just Roku. We even have linear insights because of our automated content. We’re providing our measurement, agency, and advertising partners a more holistic view and why we’re thinking about this as overall TV data, whereas those partners are just able to give measurement or signals for their specific inventory.
Krefetz: Who would be a competitor with a similar data platform?
Fisher: The reason that this is so unique is most other partners who have a similar data platform are typically walled gardens who don’t make this data available. Google has a platform called Ads Data Hub, but that’s unique to Google’s ad platform and it’s built on Google’s cloud. Amazon has the Amazon Marketing Cloud and the Amazon Publisher Cloud, but Amazon is a walled garden and Amazon owns the cloud. We’ve built this on top of Snowflake and Habu, and we’re working with other partners.
Our goal is to meet the market where it is in a privacy-safe way. Most other large partners like us make it more difficult to work with, which is where we were two years ago and why we have this broader pivot.
Krefetz: What are some of the issues in the market re: transparency?
Fisher: Most other streamers struggle to capture login and identity. The problem with FAST and programmatic is most other FAST platforms don’t have a logged-in identity. In programmatic, the whole value is being able to be targeted and addressable. So, Hulu, Disney+, Paramount+, they are logged in, but FAST is typically not logged in.
From a consumer perspective, you get a more addressable and personalized experience. From an advertiser’s perspective, there are more signals that are available in the Data Cloud. The way we activate that is on the Roku Exchange, which is our programmatic pipes, but it’s anything from ID to IP address to these more tactical signals that are happening in the bitstream.
Krefetz: What other signals are available?
Fisher: Time of day, Geo, the ad creative, and if consumers opt-in it could have an email address. There’s a laundry list of things that a programmatic platform is asking for. So those signals are standard in programmatic.
Krefetz: Directionally, where is this going?
Fisher: The next phase of what we’re going to do with the Roku Data Cloud is how can we use the data and insights we sit on to potentially empower their ad businesses? Is there value we can bring to the Foxes, the NBCs and the Paramounts to help their ad businesses be more addressable, more signal-rich? That’s the kind of rising-tides conversation we’re trying to have.
For example, NBC has the Peacock app, and a ton of other streaming inventory on Pluto, Tubi, the Roku channel, the NBC sports app, and the Bravo apps. Outside of Peacock there is very little logged-in and addressable signal. So there is value in having us as the operating system so we could go to NBC and say, “We can make your advertising more addressable.” That’s something we hadn’t considered before, and it’s something we’re considering now.
Krefetz: Where does the Roku Clean Room stand now?
Fisher: With the Roku Data Cloud we’ve expanded on the Clean Room, the connections and number of partners that we work with. It’s a privacy-safe data collaboration environment, meaning that no personal information leaves, but it allows brands or agencies to bring in other data signals and match them against Roku data.
Krefetz: Is this only for U.S. advertisers or is it international?
Fisher: It’s U.S. to start, but we’ll be bringing it to Canada very quickly. Mexico and Brazil are other growing markets, so I imagine it will be there over the next couple of years.
Krefetz: I noticed that Innovid is one of the partners.
Fisher: When they’re acting as the ad server, a lot of streaming advertisers also rely on them for measurement. One of the things we’re helping Innovid solve for their customers is managing reach and frequency. They have a product that’s an optimization feed. It allows us in real time to understand for a brand, like Pepsi, that there’s a certain tranche of inventory on Roku in whatever the genre (news, gaming, cooking, etc.), and we can start to send more of that inventory towards the Pepsi campaign. It allows us in real time to hit Pepsi’s performance KPIs.
Historically, most publishers in TV—or even in streaming—would give a campaign wrap report and it would have a certain amount of reach and a certain amount of scale. After that date, [a retail company] would come back and say, “Hey, you served all the impressions. We sold a bunch of eggs, but that was six to 12 months ago.” We’re collapsing that time to learning for us as a publisher and getting so much smarter about the inventory that we sit on and making that available to our buyers.
Krefetz: What is Roku’s reason for going in this direction?
Fisher: It’s the shift towards programmatic, beyond our walls and demand. If [a brand or agency is] buying inventory from a publisher that has their inventory on Roku, they will get these insights. But 50% of streaming is not on our system. That’s the job of the agencies and they’re stitching data together and part of what we’re trying to do is help fill that gap.
Krefetz: Can agencies get data from other environments?
Fisher: Not from Amazon, not really from YouTube. Samsung, not so much. It’ll be interesting to see what Walmart makes Vizio do. We feel that as 50% of the streaming ecosystem, we can be a real key partner to helping solve some of those walled gardens that are making it difficult.
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