Roku deploys new tool to compete with Facebook and Google in local $ 16 billion ad market
- Roku is launching an app on Shopify as part of an offer for the $ 16.4 billion small and medium businesses spend on local television.
- NBCUniversal’s Hulu and Peacock are also fighting over SMB spending.
- They try to solve the problems that prevent SMEs from advertising.
- See more stories on the Insider business page.
Google and Facebook dominate digital advertising through advertising for small and medium businesses. Now Roku is taking action to tackle SMB advertising dollars, which are heavily spent in a local TV market, Pew Research, valued at $ 16.4 billion, as well as research and social media, that eMarketer values at $ 71 billion and $ 49 billion, respectively.
Roku does this with an app in Shopify’s Marketplace to allow SMBs to buy, manage, and measure ads on its streaming service.
Shopify is an ecommerce platform that powers online stores, and merchants can use its app marketplace to gain additional functionality – developed by third parties – not available through Shopify’s core offering. Roku’s app isn’t expected to launch until mid-November, right before peak holiday season, but four small companies – Birthdate Co, Jambys, Moon Pod, and OLIPOP – are testing it.
While streaming services like NBCUniversal’s Roku, Hulu, and Peacock still pursue traditional TV advertisers with deep pockets, they also try to woo smaller advertisers by making it easier for them to buy ads. NBCUniversal offers solutions for local businesses and Hulu launched self-service tools in 2020 for SMEs.
“Historically, SMBs had to hire an agency or hire millions to make it to the big screen,” said Jared Lefkowitz, senior director of ad revenue strategy at Roku. And while Roku already has ad buying tools that marketers could use to purchase streaming TV ads on their own, these were designed for ad buying agencies, not for individual entrepreneurs.
And, if Roku incentivizes SMBs to spend on the platform, ad demand could increase, resulting in higher prices that benefit Roku.
However, SMEs have been reluctant to engage in streaming advertising.
One of the main reasons is measurement.
“SMEs are generally more budget conscious and more performance oriented and have questions about how to accurately measure what they are investing,” said Jesse Math, vice president of advanced television at the agency. of Tinuiti Marketing.
Streaming networks have tried to overcome this hurdle – unsurprisingly, Roku said its Shopify app can help with the measurement.
But there are other currently unresolved issues that prevent SMBs from investing in streaming ads. For example, the dynamic of the digital ecosystem that makes it easy for SMEs to buy ads on Google and Facebook is unlikely to happen in the streaming space, said Rob Aksman, CTO and co-founder of the tech company. Brightline television commercial.
It is relatively easy to create a display ad, he said. “CTV is very different, notably a 30-second spot that costs a lot more to produce, especially in the production quality required to be accepted by the major streaming companies,” Aksman said.
Small advertisers can also be intimidated by the fragmented streaming landscape, Math said.
“You don’t know who to trust and there is a lot of mess,” he said. “So having the confidence that you are spending your money in the right places and in the right way can be a barrier to entry.”
Finally, video CPMs are higher than display or text ads, often making the cost of serving ads out of reach for small businesses, Aksman said.
But Math pointed out that CTV’s higher price tag comes with non-skippable ads that play with sound and always take full screen.
Yet if there is anything that could spur streaming services to invest in solving these problems, it’s the opportunity to seize the $ 16.4 billion spent on local advertising – as well as the billions. that SMEs devote to social networks and research.
“If I’m a company like Roku looking for my next big earning story, that’s a nice big nut to crack,” Aksman said.