How Roku Plans to Generate More Ad Revenue
Roku screensavers are becoming fertile ground for advertising.
Roku makes streaming devices that allow users to watch TV shows, movies, and other content from the internet on their TVs. Roku also offers a variety of content, including channels from Netflix, Hulu, Amazon Prime Video, and many more. As of 2023, Roku has over 60 million active accounts. Its competitors include Amazon Fire TV and Apple TV.
When people watch content via their Roku devices, they invariably see a screensaver, which appears when a user has been inactive on their device (this is true for users of other streaming TV devices). Roku has been using that digital real estate to generate advertising revenue.
Roku’s screensaver consists of “Roku City,” a playful urban landscape first introduced in 2017. Roku is experimenting with different ways to turn Roku City into a playground for brands. For instance, at the 2023 SxSW festival, Roku created a real-life Roku City via an interactive, multi-level attraction with Best Buy. The pop-up Roku City featured a Best Buy Home Theater Experience, a rooftop diner destination, a style shop, and hidden Hollywood references throughout the Roku cityscape.
Now, Roku is turning the screensaver into a place to buy ad inventory. At the annual IAB NewFronts, Roku unveiled a number of advertising initiatives, including plans to give ad space on billboards within the screensaver, which Roku says reaches 40 million homes. McDonald’s this summer will be the first brand to appear within the Roku City skyline. The fast food giant will have an animated restaurant with its Golden Arches inserted straight into the screensaver.
And that’s not all. Roku is also relying on AI to incorporate brand messages into an “iconic plot moment” in its content library. Head of Roku U.S. Brand Sales Julian Mintz explained that AI will search for “iconic plot moments” within shows and match them up with a brand’s message. For example, an apparel ad could appear when Tim Gunn makes a critique during “Project Runway.”
As streaming giants such as Netflix embrace ad-supported content tiers, Roku also stressed at NewFronts that the company complements but does not compete with streaming businesses.
“Netflix, Hulu and Disney+—50% of all Super Bowl streaming took place on Roku this year,” said Charlie Collier, president of Roku Media.
Roku is not the first business to turn interstitials into ad opportunities. For instance, Peacock’s Pause Ad is something of a “younger brother” to Roku’s interactive screensaver. Pause Ad offers an ad initiated by the viewer when they pause what they’re watching. A static brand advertisement takes over the screen after a video has been paused for more than five seconds, typically with messaging that is contextually relevant and calls attention to the pause.
Why the News Matters
This news matters because Roku is a major player in the fast-growing connected TV industry. For the first time, streaming viewership topped cable in 2022, and this trend is not going to reverse course as cord cutting continues. As reported in Axios recently, traditional television companies and major media firms are bracing for further declines in the ad market and yet another increase in cord-cutting this year. At True Interactive, we believe it’s important that businesses understand the growth of advertising on streaming platforms in context of the rise of connected TV. If you’ve not done so already, take a closer look at why connected TV is growing and how it could expand your audience. (True Interactive can help you with that.) Connected TV is enjoying 60-percent growth, driven by a public’s appetite for streaming that continues unabated.
Connected advertising is similar to linear TV advertising because both formats rely obviously on video. But connected TV is different in many important ways. For one thing, advertisers need to understand how to create video content that will reach viewers across a variety of viewing devices in addition to TV screens, and connected TV ads are competing with multiple content streams.
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