Roku Eschews Open Exchanges for Premium Deals
Video ad demand is too hot to settle for remnant prices
Since becoming a public company, Roku’s ad business has skyrocketed. Scott Rosenberg, senior vice president and general manager of platform at Roku, spoke with eMarketer’s Ross Benes about how the digital video company approaches programmatic ad selling.
Roku recently set up its own ad marketplace. How does that work when advertisers want to buy those video ads programmatically?
The marketplace is built on a programmatic stack. So when a publisher wants to take advantage of our data and sell aggressively, they can also set it up in a private marketplace and bid it to their buyers.
Video ad platforms like Roku aim to get advertisers to move dollars from linear television to digital video. Why invest in building out programmatic capabilities when TV advertisers are still heavily reliant upon traditional direct sales?
The reason we think programmatic is such an important component of not just how we sell directly, but of [Roku’s] marketplace, is because as advertising becomes more and more targeted, you need a much higher level of automation. And you need to equip the buy side of that transaction with the tools to make more dynamic decisions about whether they want that impression, that user, or not.
Although the majority of TV advertising is not traded programmatically, we believe that over time, TV advertising is going to become more targeted and trade programmatically. That’s why we made it such a central component of our ad stack.
Does Roku make its inventory available to open exchanges?
We do not.
Why not?
We haven’t needed to. We have very valuable direct deals. The suggestion that a lot of over-the-top [OTT] video is traded on open exchanges is overstated. There are a wide variety of Tier 2 and Tier 3 publishers who float [video] inventory in the open exchange, in part because they don't operate direct sales since they don't have solid demand. Most of the premium ad-supported publishers in OTT and on our platform do not sell on the open exchange.
Do you think open exchanges will ever become a viable option for premium OTT publishers?
I do think it'll come in time as the space matures. But unfortunately, a lot of that demand either isn't appropriate for the OTT living room environment or is very, very remnant price.