Roku has spent the past few years showing advertisers the incremental reach they can gain by buying over-the-top TV (OTT).
On Wednesday, the smart TV operating system launched Activation Insights, an OTT planning tool that helps buyers plan OTT buys by understanding how much budget to shift from linear TV to maximize returns.
Brands know they need to move budgets from linear as more people cut the cord, but they play it conservatively when they aren’t sure exactly how much of shift will achieve the best ROI, said Alison Levin, VP of ad sales and strategy at Roku.
“Brands and buyers understand streaming is mainstream,” she said. “They know their audience is there but have very limited information on how much budget they should be moving to get the right audience.”
The tool provides that information by marrying Roku’s subscriber data with the data collected from the automatic content recognition (ACR) technology that is baked into more than 10 million smart TVs that carry Roku’s software. Through ACR, Roku can gauge which of its viewers subscribe to linear TV and how much of it they watch compared to OTT. If Roku knows that a specific household watches linear TV heavily, for example, it may suggest the buyer not waste money on an OTT buy, and vice versa.
“With the combination of the two, we can understand if your brand was exposed to the campaign on linear or not,” Levin said. “We have this unique view into what’s happening on the streaming side as well as on the TV side.”
Activation Insights will live within Ad Insights, Roku’s measurement suite that also houses a post-campaign measurement tool that shows buyers incremental and unduplicated reach on its platform. In a recent campaign for Baskin Robbins, 81% of 25- to 54-year-olds reached on Roku didn’t watch any linear TV, driving a 10.6% incremental reach for the brand.
Launching a complementary planning tool positions Roku well for the upfronts, where streaming is becoming a bigger part of the conversation, but ad buyers are still unsure how much budget to allocate. While about 30% of all time spent watching TV is through streaming, OTT represents just 3% of TV investment, according to Magna.
“We show them, if you move X% into OTT from linear, you’re going to drive X% of incremental reach, and here is the point of diminishing turn,” Levin said.
The planning tool also gives TV buyers new metrics they’ve never had before, such as which types of audiences they reached and at what frequency. With 75% of Roku’s audience either light- or non-linear TV viewers, positioning for incremental reach tells a strong story to buyers as linear ratings and viewership erode.
Levin declined to comment on how much Roku expects to make during the upfronts this year, but the company predicts its revenue to hit $1 billion this year.
“Streaming is only getting larger,” Levin said. “Buyers need to understand how much budget to shift, and they need to be doing it now. Otherwise, they’re going to miss a key audience.”
Correction: This story previously said Roku expects its platform revenue to hit $1 billion this year. Roku expects its total revenue to hit $1 billion this year.