Some good news this morning for advertisers and content providers trying to navigate the shift from linear TV to on-demand viewing on connected TV devices. Roku has released data from research it did with MAGNA, IPG Media Lab and 4 advertisers (Applebee’s, H&M, McCormick and Truvia), finding that video ads run on Roku were 67% more effective per exposure in driving purchase intent than those on traditional broadcast and cable TV.
The study also found that to drive comparable brand lift, only 7 exposures were needed on Roku, vs. 10 on linear TV. Also interesting is that advertising on Roku appears to have a halo effect, with consumers considering brands that ran video ads on Roku to be twice as innovative as those just on linear TV.
Kara Manatt, SVP, Intelligence, Solutions & Strategy at MAGNA noted that because ads on Roku need fewer exposures to generate the same impact as on linear TV, campaigns can be both more efficient and effective.
Although Roku started off primarily delivering ad-free viewing from SVOD services, its executives have frequently said that ad-supported VOD represents its fastest-growing content type. Advertising has become much more important to Roku’s profitability as well. In Q4 ’17, “platform revenue” accounted for 87% of Roku’s gross profit, up from 65% in in Q4 ’16. Advertising represents around 75% of platform revenue, so potentially around 65% of Roku’s gross profits.
Roku continues to have the biggest market share among connected TV devices, though Amazon in particular is moving very aggressively, including a recent deal with Best Buy to roll out a line of Fire TV Edition smart TVs this summer. eMarketer estimated last year that over 168 million Americans would use a connected TV in 2017, up 10% vs. 2016.
The research included 4,621 consumers including those exposed to the test ads and this in an unexposed control group.
(To learn more about Roku’s ad-supported success, join us at the 8th annual VideoNuze Online Video Ad Summit on Tuesday, June 12th in NYC, where Roku’s VP of Demand Partnerships will be speaking. You can save $100 by registering now and also double your chances of winning a 55-inch Roku TV.)