Roku boosts OTT ad monetisation with $150MN dataxu acquisition
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Joseph O'Halloran
| 23 October 2019

In what it says is a recognition that TV advertising is shifting toward over-the-top and a data-driven model focused on business outcomes for brands, streaming platform Roku has acquired demand-side online video ad tech firm dataxu.

Founded in 2009, the Boston-based DSP solutions provider’s technology is designed to enables marketers to plan and buy video ad campaigns, enabling automated bidding and self-serve software to manage ad campaigns programmatically across digital platforms. The dataxu solution contains what Roku calls ‘advanced’ TV and OTT media planning tools, a proprietary device graph and data science to help marketers optimise business outcomes across TV, OTT, desktop and mobile.

Under the terms of the deal, Roku is purchasing dataxu for aggregate consideration of $150 million in cash and shares of Roku Class A Common Stock. The acquisition agreement has been approved by each company’s board of directors and is anticipated to close in the fourth quarter of 2019, subject to customary closing conditions, including regulatory approvals.

The dataxu technology will see use as Roku’s traction within the OTT market gathers pace. According to a June 2019 comScore analysis, Roku streams more ad-supported hours than any other OTT platform and boasts more than 30.5 million active accounts. With advertising technology built directly into its operating system, Roku claims that it is already a top OTT ad solutions provider to leading marketers and that the purchase of dataxu will only ramp up business.

Roku sees dataxu as bringing an experienced team that is strong talent in software engineering, data science and analytics –to work with new and existing marketers on Roku’s existing advertising platform. “The acquisition of dataxu will accelerate our ad platform while also helping our content partners monetise their inventory even more effectively,” said Roku chief executive officer Anthony Wood.

For Mike Baker, dataxu co-founder and CEO, the vison of the company in its ten years of business has been to bring the power of data science to the art of marketing and to bring these capabilities to TV, the most powerful form of media. But he recognised that times have changed.

“As the consumer TV experience is transformed by streaming, we have brought our advanced data science technologies to help TV advertisers drive valuable outcomes,” he remarked. “Roku is wildly succeeding as the No. 1 US. streaming platform...We are very excited to join Roku’s Platform Business. Roku is gaining a team with great expertise and experience...We will flourish as a core part of Roku’s platform.”

The deal has also been widely recognised by the ad tech industry as offering both immediate advantages and yet having intrinsic complexity. “This is a great buy for Roku,” said Morgan Rigsbee, VP of product, programmatic at Fluent. “It already has one of the largest household audiences with 30 million active accounts. DataXu will not only enable [Roku] to offer self-service capabilities, but it will also expand its supply side representation. It’s encouraging to see the continuation of the demand getting closer to the supply.”

Yet, Frank Sinton, founder and president of Beachfront noted that the acquisition was actually hard to unpack. “On one hand, it's supportive of Roku's aspirations to compete with Amazon and Google. Roku now looks a lot more like those guys. They sell ads. They have a data walled garden. And now [Roku has] a self-serve buying platform. On the other hand, there is economics conflict between the Roku and dataxu businesses. Demand-side platforms work for ad buyers with a goal of driving prices down. Roku is in the business of increasing the yield of its inventory. It will be interesting to see this complex dynamic shakes out. Additionally, it remains to be seen what Roku's strategy will be in terms of monetising third party OTT inventory, which will be an interesting development that will impact the broader industry.”