The Trade Desk ad pact could be ‘serious needle-mover’ for Roku

Alongside NewFronts presentations this week, Roku announced new ad pacts with measurement vendor iSpot and DSP The Trade Desk – the latter which Macquarie analysts see as potentially having a significant impact for the streaming company’s advertising sales efforts.

Here’s what Roku and The Trade Desk are teaming up on:

  • Roku Media is directly integrating with The Trade Desk, where advertisers can access it through a range of options in a biddable private marketplace.
  • Roku is providing the Trade Desk with audience behavioral data and automatic content recognition (ACR) data, which was previously only available to advertisers buying directly from Roku’s own ad platform. The data integration into the Trade Desk will enable DSP clients to better understand, optimize and target campaigns for streaming TV viewers, according to Roku.
  • With access to ACR data through Roku Media on The Trade Desk, the company said advertisers can suppress incremental households that have seen their linear TV ads (meaning they won’t serve the same ad to Roku viewers who have seen it on linear TV).

“Matching Roku’s reach with the power of The Trade Desk’s innovative solutions will unlock new ways for marketers to reach the right TV streaming audiences strategically,” said Jay Askinasi, SVP, Head of Global Media Revenue and Growth at Roku, in a statement. “We strive to be even more interoperable with the most prevalent buying platforms in the market to meet our advertisers where they are. It’s simple to use and highly effective at reducing waste for buyers, and it will improve the ad experience for our millions of viewers.”

As of the end of the first quarter, Roku counted more than 81 million active accounts, streaming 30.8 billion hours in the period.  However, as executives on first-quarter earnings noted, engagement on its platform is outpacing monetization. Expanding programmatic ad capabilities is one key area Roku CEO Anthony Wood pegged as a focus for accelerating platform revenue growth in 2025 and beyond, as well as improving home screen monetization.

That also extends to its free ad-supported streaming TV (FAST) service The Roku Channel. During the company’s Q1 earnings call, Wood cited a lot of opportunity “to close the gap in engagement on The Roku Channel and the fill rates,” adding that “programmatic ad capabilities are one of the ways we intend to do that.”  

And Tim Nollen, senior media tech analyst at Macquarie, thinks The Trade Desk partnership could make a significant impact on Roku’s aims.

“For Roku, we view this as a potentially serious needle-mover for the company,” wrote Nollen in a May 1 note to investors.

As the analyst noted and Roku mentioned during Q1 earnings, the company recently pivoted to make third-party integrations, including DSPs, more of a priority for its ad sales strategy and now partners with more than 30 programmatic DSPs.

The firm pointed to a trend over the last seven quarters – from Q3 2022 to Q1 2024 – where Roku’s streaming hours growth has outpaced platform revenue growth, with the latter largely consisting of ad sales.

But Roku has had its challenges with ad sales, Nollen said, “in a market that ironically remains reliant on insertion orders, as this is how advertisers have historically bought linear TV ads.” However, this is now changing, according to the firm.

“Roku’s advertising fill rate is only ~50%, meaning it is looking for more sources of demand,” wrote Nollen. “The Trade Desk (and other DSPs) should bring more demand to fill its supply more effectively than its ad sales team and its own sub-scale DataXu DSP can do.”

The firm expects the new data integrations and more direct buying access through The Trade Desk will include ads sold on The Roku Channel, along with other CTV apps that Roku retains a share of ad inventory from.

In addition, Macquarie thinks the partnership could potentially hasten Roku’s ambitions outside of the U.S. market.

“Roku has established scale in several markets outside the US, where The Trade Desk with its global presence can help monetize ad inventory,” wrote Nollen.

In another ad-related move this week, the company announced an expanded partnership with iSpot that includes two-way measurement sharing and makes the vendor a preferred third-party measurement partner for Roku.

Specifically, Roku said the partnership means direct and programmatic advertisers will be able to get metrics that measure unique reach, frequency, verified ad exposures and outcomes delivered across ads running on its streaming platform. iSpot’s also integrating Roku’s Advertising Watermark to verify authenticity of video ad inventory originating from the platform. And the measurement vendor is getting access to Roku’s first-party audience data, enabling iSpot to better “connect audiences deterministically across linear TV and streaming on Roku.”

It also brings the ability for marketers to measure Roku’s non-traditional ad formats, such as Roku City brand integrations and Roku Marquee ads.

“Roku wants to use its unique assets built on the foundation of its massive footprint of 81M+ streaming households to further the measurement across all streaming channels and linear TV, to help solve for the problem of fragmentation in the industry,” said Louqman Parampath, VP of Product Management at Roku, in a statement. “Together with iSpot, we believe improving measurement for the entire ecosystem will help drive better results for advertisers, while also driving more yield for publishers.”

Article updated to reflect the deal with iSpot makes the vendor one preferred third-party measurement partner for Roku. An earlier version incorrectly indicated iSpot as the only preferred partner.