The Roku Deal with Google: Advertiser Q&A

The Roku Deal with Google: Advertiser Q&A

by Tim Colucci Connected TV

The fight is over – for now. Connected TV provider Roku has reached a multiyear agreement with Google to keep YouTube and YouTube TV on its streaming platform. Thus ends a months-long standoff between Roku and Google that had resulted in Roku users losing access to YouTube TV (Google’s livestreaming service) and most likely the YouTube app. The deal will allow the 56.4 million active Roku accounts to continue to watch YouTube and YouTube TV without disruption. So, what does all this mean to advertisers? Let’s answer some questions:

Why does Roku matter to advertisers in the first place?

Roku matters because it’s a gateway to over-the-top (OTT) television viewing, which is gaining in popularity. OTT television refers to watching TV content that is streamed directly through the Internet – such as subscribing to a streaming service or streaming content from apps like YouTube on TV.

Approximately 2.3 billion people worldwide watch OTT content, and the number are growing. The OTT market will grow to $1.039 trillion by 2027, according to Allied Market Research. Of all the revenue made in the OTT market, 52 percent comes from advertising video-on-demand (AVOD). In short, advertisers are following the eyeballs.

You don’t need cable to watch OTT — but you do need a device like Roku.

Roku competes with devices such as Amazon Fire TV and Apple TV to offer audiences access to OTT. These devices collectively are known as connected TV. Roku is the most popular device, with a 37 percent share of TV viewing time in North America.

These devices control access to content on OTT. They need to support apps and streaming services in order for a viewer to get access to OTT. In short, connected TV devices wield considerable power. And Roku is especially popular because it sells smart televisions with built-in streaming technology along with devices that users can plug into TVs.

Roku makes most of its money selling ads on streaming channels and taking a share of the streaming services’ subscription revenue and ad inventory. In addition, Roku offers OneView, an ad-buying platform for TV streaming.

What was the problem between Roku and Google?

Roku had removed YouTube TV from its channel store in April as part of a dispute with Google over how search results were displayed on Roku’s platform. As a result, viewers could still watch the Google app, but access to the app was about to expire when Roku and Google reached a deal.

Roku alleged that Google interfered with Roku’s independent search results, requiring that it favor YouTube over other content providers. The company also claimed that Google discriminated against Roku by requiring search, voice, and data features not required of other connected TV devices.

As a result of Roku removing YouTube TV, an owner of a Roku device could not stream YouTube TV via OTT. The YouTube TV app allows subscribers to watch live TV channels online for a monthly fee. YouTube TV offers live streams of nearly 100 popular channels, including ESPN, CBS, Fox News, and CNN.

And, Google lost access to those viewers for its ad-supported YouTube TV service.

Why did Google and Roku reach an agreement?

Google was under pressure to reach a deal. Google would have lost out on millions of dollars in ad revenue in addition to the YouTube TV revenue that would have come from Roku. But Roku had motivation to reach an agreement, too. Competitors such as Amazon Fire TV and Apple TV carry YouTube. Roku could have lost customers to those competitors.

What were the terms of the deal?

Terms were not disclosed. We don’t know what concessions both sides made to restore access to YouTube TV for Roku viewers. Likely Google eased up on some behaviors that Roku deemed anticompetitive, but it’s hard to say exactly what might have happened.

What should advertisers do?

The news underscores why it is important for advertisers to understand the constantly evolving OTT and connected TV landscape. Connected TV makers are rolling out more ad units that increase revenue (for the connected TV devices) and reach (for advertisers). For example, Amazon is expanding advertising opportunities on Amazon Fire TV, which competes with devices such as Apple TV and Roku to stream content on connected TVs for millions of viewers. Amazon Fire TV is more than a connected TV provider. It’s a way for advertisers to reach people as they browse and discover new entertainment. One new ad unit, Sponsored Content Rows, is designed for businesses to promote content such as new shows and movies in the form of a row (or carousel) of sponsored content while people browse for shows on their connected TVs (akin to sponsored search results in a Google search engine results page).

Watch, learn, and capitalize on connected TV and OTT ad opportunities.

Contact True Interactive

Eager to capitalize on the opportunities connected TV can offer your brand? Contact us. We can help. Learn more about our connected TV services here.

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“Advertiser Q&A: Connected TV,” Tim Colucci

Advertiser Q&A: Connected TV

Advertiser Q&A: Connected TV

by Tim Colucci Advertising

As we blogged in 2019, we are living in a connected TV (CTV) era, one in which audiences are fragmented, consuming content across multiple devices and channels. CTV provides brands with tremendous opportunity, but some confusion persists about what it is exactly. Read on to learn more about CTV, how it differs from over-the-top (OTT) TV, and how it might benefit your brand:

What exactly is connected TV?

Connected TV refers specifically to the device used to access content (e.g., devices such as Amazon Fire, Roku, and Apple TV, not to mention gaming consoles like Xbox). Andison Flores at LiftIntent explains, “CTV is anything that allows your TV to access video content through the public Internet, as opposed to traditional cable.”

Is connected TV the same as OTT?

Though CTV and OTT are often used interchangeably by marketers, brands, and even reporters, there is a distinction. As Tal Chalozin, Co-founder and CTO at Innovid, says, “OTT means you are accessing content ‘over the top’ of infrastructure providers.” For example, users might be purchasing bandwidth from a provider like Comcast. But they can go “over the top” of Comcast by buying additional content—subscribing to Hulu, say, or Netflix. Chalozin explains, “You’re using the bandwidth provider as an access layer but not as the main way you’re accessing content.” In short, OTT refers to the new breed of content providers.

The Interactive Advertising Bureau (IAB) makes a handy comparison:

  1. “Use CTV when you are specifically talking about Smart TVs and streaming devices that are attached to TVs. Mobile and desktop devices are not included under the term CTV.
  1. Use OTT when it doesn’t matter which devices are included. For example, if you want to talk about ‘OTT services’ (like Hulu or TubiTV), and delivery to a particular device doesn’t matter. OTT is still a valid term that distinguishes premium television content from the vast world of online video where user-generated content is commonplace.”

Why is connected TV getting popular with viewers?

As Anna Kuzmenko, COO at BidMind by Fiksu, notes, CTV offers users the freedom to “watch whatever they want, whenever they want.” Millennials and Gen Zers in particular have “cut the cord,” eschewing the limits of linear TV viewing in favor of streaming.

Why is connected TV popular with advertisers?

Advertisers are following their audience. According to Forbes, a recent study from the Leichtman Research Group estimates that 80 percent of TV homes in the U.S. have at least one connected TV device. That number represents a steady increase from the 57 percent logged in 2015, and 24 percent in 2010.

Predictably, CTV use soared during the pandemic: Forbes also cites a Nielson report, which notes that CTV viewing exploded from 2.7 billion hours during the pre-pandemic week of March 2, to 3.9 billion hours during the weeks of March 23, March 30, and April 6. Even during the week of May 4, when stay-at-home laws eased in some states, CTV viewing remained above pre-pandemic levels at 3.5 billion hours.

These stats are good news for advertisers embracing CTV. So is the fact that CTV allows brands to reach out to specific audiences. As Forbes notes, “CTV’s targeting capabilities are the ‘holy grail’ for advertisers.” Many CTV companies use ACR, or Automated Content Recognition, which collects data that can inform programming recommendations for users and better target ads to niche groups. Although audiences in the era of connected TV may not be as huge as the linear TV days, CTV helps brands better understand and reach their niche market effectively.

And the future of CTV looks bright. Kuzmenko says, “In 2021, CTV ad spend is estimated to hit the significant sum of $10.81 billion.”

How do you set up a connected TV campaign?

The approach for now is very passive: you give a connected TV provider such as Verizon Media/Yahoo the desired demographic you want to reach, and Verizon Media/Yahoo tells you what the CPM (cost per thousand impressions) will be. Verizon Media/Yahoo manages the rest.

Note: different providers have different requirements. With Verizon Media/Yahoo, for example, you can dive in with any budget, but a $20 CPM is minimum if you want to get a reasonable amount of impressions. And as might be expected, the more targeting that you do—narrowing your demographic by city, say—the more expensive advertising is going to be.

What metrics can connected TV providers give you?

It varies. iHeart Media gives you impressions, cost, CPM and completion rates as well as some demographic results with similar KPIs. Verizon Media/Yahoo gives you impressions.

Additionally Verizon Media/Yahoo can include conversions as well based on users’ IP address, Yahoo mail receipts, and other proprietary data/tools.

Contact True Interactive

Eager to capitalize on the opportunities CTV can offer your brand? Contact us. We can help.

Photo by Li Lin on Unsplash