Speaker 2: 0:02

Welcome to this week's edition of the Dan Rayburn podcast, the show that curates the streaming media industry news that matters most, unvarnished, unscripted and providing you with the factual data you need to know, without any of the hype, the pulse of the streaming media industry.

Speaker 1: 0:20

Welcome to the Dan Rayburn podcast. I am Dan Rayburn. Thanks for joining me for a special podcast this week. For another executive interview series with me today is Dan Robbins, who's a VP of ad marketing and partner solutions at Roku. I'm going to have Dan introduce himself in a minute, but first I'm going to frame what we're going to be talking about today.

Speaker 1: 0:39

There's so much going on, as you all know, regarding video advertising, whether it's fast, whether it's AVOD, whether it's tied to live sports. There's so much going on in the sports realm as well. But with that, we have a lot of challenges as an industry, both from a technical standpoint and a monetization standpoint, but also a lot of opportunities. If we look at just some of the things that Roku recently announced in their Q2 2023 earnings, for instance, their streaming hours were 25.1 billion hours streamed on their platform, which is just pretty incredible. It was up 4.4 billion hours year over year. So an amazing amount of content is being consumed every day across all these different platforms, and want to thank Dan and Roku for coming on the podcast today to talk about what they're seeing in the market as far as the challenges, some of the change to the business on the advertising side. So Dan and I are going to focus today on the advertising aspect of the business.

Speaker 1: 1:37

Now, so much down into the technical weeds. There's a lot we could talk about there as well, but really the monetization, the business opportunities and also some of the content of what's Roku sees, what's working well, what isn't. Different types of content, different types of platforms. We also want to hear from Roku as well just some of the specific things they're seeing, that they're doing, where they're tailoring specific things to marketers and advertisers. So with that, let's jump right in. Dan, appreciate you coming on the podcast today. Why don't you just give everyone a little bit of overview of what you do at Roku and what your responsibilities are?

Speaker 3: 2:11

Thanks, dan. I'm excited to be here. My role in vice president of ad marketing and partner solutions is really focused on how we tell our story to marketers and to advertisers and the broader media community, and that includes both B2B marketing as well as measurement analytics and our brand studio, where we create content with marketers. And it's an incredibly exciting time to be in streaming because, as you had mentioned, so much is changing so quickly and there's tremendous opportunity for the industry at large.

Speaker 1: 2:45

So with that, let's just jump right into it. Let's separate AVOD and FAST. I'd like to keep those a little separate for this conversation, because they really are two completely different animals. So let's talk about AVOD today. We've obviously seen Netflix recently roll out their AVOD service. We've seen some interesting stats from them in terms of the number of subscribers that are opting for AVOD over some of the other options they have, with SVOD or without ads. What is it that you're currently seeing, especially with all the partners that you're working for, because Roku doesn't have an AVOD service? You have FAST services, of course, and you work with others that have what I'll call premium SVOD services. But on the AVOD side specifically, what is it that you see working on the advertising side with regards to the targeting and the measurement of what advertisers and brands are asking you for?

Speaker 3: 3:40

So we do actually have an ad supported service with the Roku channel and I think helpful to Roku channel, of course, yeah, so helpful actually, to wind back to the beginning and talk about how we got here, where ad supported streaming has really reached maturity, and Roku was founded with the mission to be a streaming platform that connects and benefits the entire TV ecosystem around the world.

Speaker 3: 4:05

And today Roku streaming devices, which include TVs that we create and that we license our players, our audio and whole home products.

Speaker 3: 4:14

They're used by more than 73 million active accounts in North America, latin America, parts of Europe and more, and the ambition has always been let's connect users to streaming content they love, help content publishers build and monetize large audiences and make it easy for advertisers with sophisticated tools that are going to help them reach and engage consumers and build their own businesses.

Speaker 3: 4:42

And serving that ecosystem is what's made Roku the number one TV streaming platform in the US and Canada, mexico and more, and within that, we've always believed that not only would all TV be streamed, but all TV ads would be streamed too, and part of that meant bringing the best of digital advertising to the site sound and motion of the largest screen in the home.

Speaker 3: 5:05

And it also meant that the consumer was going to want choice and ease and convenience, and that means not only streaming movies and television that are subscription and ad free, but also mainstream media maisons, tv that is ad supported, and several years ago we saw in the data that the number one searched for term on Rokucom was free. The consumers wanted free movies and televisions without a signup or a subscription or strings attached, and that was the genesis of the Roku channel, which is our home for free and premium entertainment, and it has since grown to become a top five service on our platform and now homes not only just free movies and television, but Spanish language content, kids and family, as well as Roku originals, which are our own produced movies and TV shows. So what's most exciting, I think, in summary, is that ad supported streaming has really accelerated and there's a tremendous opportunity across the industry to take advantage of that growth.

Speaker 1: 6:13

Yeah, so of course, Roku channel. I forgot to put Roku channel for Avod. Then you have the fast channels with Avod. You also have the original content. As you mentioned, you're creating your own original content, obviously licensing content as well, and then you're working with third party companies as far as their S-VOD services, and I definitely think of Roku as like an aggregation platform for that, even though not all that content is yourself that you're creating. But across all those right, if we're talking about advertising here, what is it that the marketers and brands are actually asking you for when they're buying advertising on the platform? What is it that you're trying to reach, which everyone defines differently? Is it engagement, which I don't think there's any agreed upon metric in the market? Is it brand lift or is it measuring? Okay, because they saw this, they actually bought our product. What is the number one thing they're asking for?

Speaker 3: 7:01

Well, I think it certainly depends on the marketer and what their objectives are.

Speaker 3: 7:04

Are they focused on brand building, on performance marketing, on something else?

Speaker 3: 7:08

But I think, at the highest level, it's helpful to start with where the industry is today, which is that, first of all, linear TV viewing is declining, and just in August, for the first time ever, traditional linear television made up less than half of overall hours, according to Nielsen.

Speaker 3: 7:25

So streaming is now larger than broadcast and cable, and that's never happened before. And so if you're a marketer, you're looking at this shift and saying I can't find the consumer base that I used to in traditional TV and it's migrated to streaming television. Now the next thing has been how do I make my company unmissable in TV today so that I can build my brand, get people into my store, move product off the shelf? And the value proposition for streaming television is that it marries the best of TV and the best of digital, and the ask there is to find experiences and solutions and ways to buy and to measure that you're going to bring the precision and the optimization and the results that you see in digital advertising and marry it together with the branding power of the largest screen in the home, and that's very much how we think about what streaming can do for marketers.

Speaker 1: 8:23

But what are the challenges they're having there? Because some of those terms you used are terms we hear in the industry every day, but people aren't defining them. They're not defining reach and some of that is because they define it differently. So the challenges that you're hearing from marketers and brands overall is what? Is it not enough targeting? Is it that, from your angle to CPMs are too low? What's the challenge? They're keeping this from growing to where we're getting more of the ad spend.

Speaker 3: 8:49

Well, I think one thing that's at a very high level interesting is that the ad spend has really started to move to streaming from traditional television. You see that in quarterly earnings from larger media companies and you see it in the overall spend. It's now a multi-billion dollar industry and it's still relatively new. It's early days in what is a pretty tectonic shift in the way that television is consumed and the opportunity for marketers. The challenge is in. Anything new is really how do I make sure that the investment I'm making is the right one for my brand, that the experiences and the products that I buy are going to be the ones that showcase my product? And then I'm getting access to the data and the measurement that's going to be able to measure whether this all works. And over the last few years we've seen marketers increasingly have those case studies and, having tested and learned, now thinking about how do you expand it more broadly. And that's really where the last 12 to 18 months have been.

Speaker 1: 9:53

And what are some of those metrics that they're using? How are they defining engagement? What are the metrics in terms of targeting?

Speaker 3: 10:00

I think very much depends on who the marketer is, and so for some it's all about how do I find those gross rating points, or GRPs, that I used to get in traditional television and now I'm going to replace in streaming, and I want an audience guarantee. That's just ensuring that I'm reaching that right audience and maximizing my unique reach For other marketers. Where it's more performance driven, it's about cost per acquisition and incrementality. Can I make sure that that ad I'm serving is actually bringing people to my website or in store and can I make sure that that is incremental to the rest of my media plan and what it might have happened without the ad altogether? What's exciting is that those metrics are available in streaming TV today, and now it's about building out the best practices of what works.

Speaker 1: 10:46

So not surprising, obviously, I think any of us that they're going to be comparing it to house broadcasting. It is handling with advertising but obviously, as we, as we all know that's, there's some correlation there. That's just not accurate right there, thinking about a legacy platform to your point, they're moving to a very different platform, certainly from a targeting standpoint. What are some of the things that you have to point out to marketers and advertisers to make them aware that there's a different way to deliver this and a different way to measure this as compared to broadcast? A?

Speaker 3: 11:17

Few things there come to mind. The first is that Streaming TV can be full funnel, so it doesn't have to just be top of the funnel or the bottom of the funnel, but you can measure those metrics. We were just talking about Dan on one campaign, and that's a different way to think about the television screen. The second thing has, for us, been the push into commerce, and so we launched a partnership with Walmart, followed by Shopify, that allows Consumers to buy products from video ads just with a click of their remote. So you see an ad for a for a product, you press okay, it's added to your cart and you can confirm your order with details from Roku pay, our payments platform, and get an email confirmation from Walmart or from a Shopify merchant with shipping details. That totally changes the game, because it makes television not just a Performance or an advertising vehicle but a true commerce destination, and there's a tremendous amount of opportunity there. To your point is about thinking totally differently about what this can all be.

Speaker 1: 12:18

Yeah, because I would never think of that. Obviously, in the broadcast side and the way they're measuring how you see a broadcast ad and then do you actually drive to your physical store, that's a. That's a very different metric and methodology to track, as opposed to to your point Almost an instant gratification and purchasing something on screen that you know you just saw an ad for or within an ad. That's a very different way to measure something. Do you see that as being something know that consumers actually want?

Speaker 1: 12:46

Because one of the things we've seen in the past from from shopping related, you know, call it hotspots within videos, whatever you want to call the technology that's been around over the last 15 or 20 years a Lot of times that that hasn't taken off because, even though we can do it as an industry in the technology works, consumers didn't want to actually buy products that way. Do you see that there are specific Product categories or brands that you think will do better than others? Obviously you're not going to buy a car that way and the Walmart example is interesting because I Think of that in terms of the depth and breadth of what they have, what you can actually purchase from them. So are you looking more With companies for that angle, where they have a large category of products to sell, or could it also be something that's more niche and more targeted?

Speaker 3: 13:34

You're absolutely right that there have been fits and starts in making television commerce driven now for decades. I do think two things have changed just within the last five plus years. The first is the tech TV is now fully internet enabled and that's different from the past. So, for instance, roku pay, which I mentioned it's our payments platforms. It makes the shoppable ads experience seamless. On Roku, you don't need to punch in your credit card every time, you don't need to fumble with your phone trying to scan a QR code. All of that can be handled right from the remote.

Speaker 3: 14:08

The second thing is that the consumer behavior has changed.

Speaker 3: 14:10

We've all learned to buy things on our phones and so then you realize, as a consumer, that buying on your TV actually isn't that different. What we've started to see in the early research and results is that this stuff does have a lot of promise and, to your point, there are products More in the mid-price range that are appropriate for buying from the television screen, and there are certain creative best practices that allow TV ads to be effective as a shoppable unit. So having a clear call to action that this ad allows you to purchase a product, making sure that the instructions and the conversion show up early and often within the creative and Using this actual native integration, as opposed to a QR code which you know has 8 to 10x better results from what we've seen in the early research. All of that, to us, is really promising and we've been excited to partner with Walmart and to Shopify, which are, you know, two of the largest retailers in the world, both with their own footprints and the merchants they work with directly, to start to scale and explore this.

Speaker 1: 15:13

And it's an interesting. It's an interesting model news case and I like the fact that you're saying the creative ad has to change as well and these companies have to think best practices because for another, in order for it to work, you obviously have to understand your audience. You have to understand how they actually want to interact with it. The fact you're helping the brand learn that. I'm definitely interested to see more of the data you guys put out and I got to say Roku's pretty good as a company about sharing a lot of the insights they have with customers over time, so to me that's an interesting one to watch. I don't think it'll work for every single brand out there, but I don't think that's the point of it. I think I think your point of being selected, of who you work with and who has the best products and services this works for at the right price point, is really key.

Speaker 1: 15:57

Let's jump into fast for a minute, dan, because wow, the the amount of talk about fast over the last 18 months is incredible. I've been writing a lot about fast, where it's interesting when we see some of these viewership numbers, but to date there isn't a single company out there that has fast channels that is willing to break out their revenue and actually talk about whether or not they're profitable. Most won't break out their revenue at all. None will talk about whether or not it's profitable. Nobody breaks down CPMs.

Speaker 1: 16:25

I do hear from fast channels individually and platforms like yourselves and others that have other fast channels, that in many cases, sometimes you know, 15% of the channels make up 85 Total percent, or sorry, 85% of all the viewing comes from 15% of the channels. Not surprising, so you know. My first question for you around fast is Do we just have too much content out there? Because I do feel as a consumer side, from the consumer standpoint, there's so many options with fast that it just almost Overwhelms you to the point of do I want to scroll through three or four hundred channels, which was the whole Complaint about broadcast cable TV?

Speaker 3: 17:08

To me, the most exciting promise of streaming and you, the way that ease and choice and convenience have shown up in television today is that, as a platform, we have the opportunity to match the content to the consumer and To make it easier to find the next show or the next channel that you love, so that you're not scrolling through a channel guide, you're not digging through search trying to find something without being successful, or just watching trailer after trailer and not actually starting something.

Speaker 3: 17:39

The idea of being able to bring the content, the data, as well as the actual tech to make those recommendations Smarter, ai driven and more curated and thoughtful that really helps in the discovery process and it's something we look at really closely.

Speaker 3: 17:57

We announced several quarters ago that streaming hours from our left-hand navigation Experiences, which are on the Roku home screen the things that help you find what to watch next had doubled year over year. We've put a lot of investment into things like featured free, which just pulls together free movies and shows that might be relevant to your be interests across our entire platform what to watch, which highlights again Recommendations that may be free or not free that could be interesting, as well as new zones like the sports zone, our food and home Zone, that bring the best of that content across our platform for consumers all in one destination. Sports is a great example of this, because we hear from consumers that it can be hard to figure out when the game is, how you get there, what you might need to be able to stream it, and so by putting that all in one place, we feel as a platform or uniquely positioned to help solve that problem.

Speaker 1: 18:56

Yeah, I like the fact that you guys added the sports for sure, and what you're really talking about us is search and discoverability, making it easier to find content, and that's, I would say, required when you're gonna have so many fast channels and fast options tied into avod, tied into potential premium.

Speaker 1: 19:14

To me that's a big thing and, frankly, in the Roku platform I I think you do pretty good in the recommendation side, at least with me, because Some of the other platforms out there, I've never watched cartoons ever. I mean, I just haven't. I don't have kids in the home and yet some of the other platforms, when I turn, turn on my device, the first thing I'm getting is recommended as cartoons, and I'm like, why are you giving me cartoons? It just it doesn't match anything I've previously viewed. Roku's been really good about that, I think, especially on the sports side, at least understanding my preferences and what I've been watching in the history there. How does it change, though, when it comes to advertising on fast? How does that change compared to avod in terms of what advertisers want to advertise against, because fast is different from from a content standpoint? And also, does the methodology of how they're measuring success change with fast channels over avod, or they just still see it as on-demand content.

Speaker 3: 20:09

Many respects I think it's still all on Add on-demand content, or ads rush to say rather ad supported content, because it is Hollywood quality movies and television or news, sports and entertainment that has that TV quality factor and it may be Delivered in a live channel or it may be delivered on-demand within a different service. But for marketers, all the tech, the data, the benefits, the measurement that you get in streaming, it's available in both of those environments. And when you look at most of the large media companies now, they have both strategies that allow them to license their own content to providers launching ad-supported tiers within their own services. And you know, for instance, with Roku, we've launched free ad-supported channels with Warner Brothers, discovery, with NBC Universal and with others. So it's really about giving that customer ease, choice and convenience and for marketers, you're getting that same benefit, no matter where it shows up.

Speaker 1: 21:05

And then, as far as the marketing side, you know, let's talk about measurement for a minute. Unlike the broadcast world, where we've obviously had standards and everything video quality even right, we know what high definition is in the broadcast world, everything was primarily always measured in Nielsen. Nielsen, obviously, in the last couple years, has come into Our streaming world a lot more and has cut deals with most of the major players out there, but there's still a lot of argument around setting standards for how the methodology and measurement of ads that take place across streaming services should be measured, and everyone seems to be arguing about what should be defined as Engagement. Do you think that really matters, though, or does it really only matter what your consumer wants to measure in the methodology they want to use? Do we really need a standard, is the question.

Speaker 3: 21:58

It's certainly an interesting time to be looking at TV measurement. That's my background before I came into the role that I'm in now. You can't invest in what you can't measure. Well, there's this real opportunity for us to find new currencies and new ways to measure TV that maybe weren't possible without big data, without integrated platforms before. The things that we're focused on are how do we just make sure that measurement is getting better? As you mentioned, nielsen Roku was the first TV streaming platform to launch ratings with Nielsen. Now, over five years ago, we've since expanded to build a measurement partner program that includes more than 30 companies that do everything for measure. Who did it add? Reach All the way to? Did it drive a reaction and get product to move off the shelf?

Speaker 3: 22:48

A few of the big things I'd say we're thinking about is first, identity making sure that any way that you measure ads is tied to quality data, tied in a direct consumer relationship, it's accurate and it's consistent and it's privacy compliant. The second is really looking at the quality of panels. For many new audience currencies, big data is married to this panel data. What's really important is that the audiences of television have changed. We moved from a world where a decade ago, about almost nine in 10 American homes had pay TV, and now it's less than half. Making sure that panels really represent that cordless audience accurately is incredibly important, no matter what metric you're going to look at. Then, lastly, it comes back to something we were talking about before, dan, which is the full funnel, that marketers no longer have to choose between the upper funnel, lower funnel. The leading brands can focus on the full funnel from the moment a consumer sees the ad all the way to when they purchase a product with the remote for delivery.

Speaker 1: 23:51

Panel. That's interesting. I didn't think about that, but that's a really good point, because garbage in, garbage out. If you're not measuring it from the right people, it's the wrong data. Absolutely, the panels are interesting. In the couple of minutes we have a few other things to cover here we obviously have to talk about as an industry we do a little bit, but I don't think enough ad formats. You obviously have to use the right format for the right type of video service and also depending on who the advertiser is in stream and page overlays. There are so many different formats. What are some of the new creative ad formats that Roku is working on? Are you working on those because you're seeing a big demand from advertisers or is it more? You're trying to help the advertisers push to those formats because of the benefits they'll get from using them?

Speaker 3: 24:38

We put a lot of energy and thought and care into ad innovation. We talked a little bit, dan, about commerce, which we see as being a big opportunity on the TV screen. Another big area of focus for us is opening up the entire streamer's journey for marketers. What we mean by that is there is an opportunity to go well beyond the traditional 30-second spot in the ad break, because that viewer journey today it starts when you turn on the TV screen and it goes all the way through to when you decide what to watch next. If you're a marketer, you don't just want to be stuffed into an ad pod. You want to figure out exciting ways to surprise and delight at every step of that journey.

Speaker 3: 25:21

One of the big ways that we've done this is bringing Roku City to advertisers. Roku City is our digital downtown that shows up in between streaming sessions, before and after you choose what to watch. It has become tremendously popular with streamers. There's a tweet about it once every 10 minutes or so. More than 40 million homes interact with Roku City on a regular basis. Just by population, that makes it larger than the UK or Canada. It's a big opportunity for marketers to show up in a way that's different and streaming first, and we've been really excited to have Walmart and McDonald's and the Barbie movie all have their own buildings in Roku City. That's just one way that we think there's this whole canvas for marketers to do new and exciting things that they've never done before.

Speaker 1: 26:17

Hey what you think they can do on broadcast.

Speaker 3: 26:19

TV.

Speaker 1: 26:19

Exactly. Yeah, I agree. I think there's a lot of ways the industry can still move forward with different ad formats that historically I feel like we've gone from, you know in the industry, in-page to in-stream to overlay Okay, those aren't that different than one another and not quite creative In many cases. Less real estate, no interaction. I agree, I think ad formats have a lot of ways to go.

Speaker 1: 26:44

Final question for you here, dan, as we're wrapping up I think it took a lot of people by surprise when Roku recently announced that you know they were deciding to build Roku branded TVs and for sure they were going through a road launch in the last few months. Right yeah, oh boy, with a third party. I should say you're not building them on your own with a third party. And it was interesting in terms of when you were asked why this is a case. Roku management was asked under an earnings call why are you going to do that?

Speaker 1: 27:05

Get in the TV business hardware. The margins are thin. I thought it was really interesting how you were talking about the reason for doing is to help benefit advertisers and marketers in terms of what they can actually build for and what they can do. So what can you talk about there just in terms of what Roku as a company is looking to learn from that experience and how having that TV set that's yours helps that marketer and advertiser in terms of the full build out of how they think about their go-to-market strategy.

Speaker 3: 27:37

We launched Roku branded TVs, which are TVs that we have designed and helped bring to market earlier this year, and our vision for these Roku TVs was to bring the best of Roku into a television that we had designed and made for our consumers. From the ground up, we've long had a program where we license our operating system out to TV manufacturers. We have more than a dozen partners globally that make Roku power televisions, and it's one of the reasons we're the number one TV operating system sold in North America. The TVs that we create are an extension of that strategy and to give us the opportunity to test new things, bring the best of Roku forward in a television and do it in a new and exciting way. We want to bring our advertising partners along on that journey, and I'd say it's still early days for us in the marketing side to figure out exactly how this will again be yet another canvas and way that advertisers can make the shift from traditional TV into streaming TV.

Speaker 1: 28:47

So to do that and really experiment, was what you're saying you felt you had to basically own the platform and the TV as opposed to working with, like you mentioned, all the other partners you have out there that license your OS.

Speaker 3: 28:57

I think it's a both and we really value the partnerships that we have and we're excited to also continue to experiment on our own and make sure that whatever we do, it's doing right by the consumer, the content owner and the advertiser.

Speaker 1: 29:10

Okay. So final question for you. There's one thing that you could pick that marketers and advertisers better understand. You do a lot of education in the market. We all do, no matter what role you're in the streaming market. If you're selling to someone something, you have to do education. There's a lot of news out there. A lot of it's not accurate. There's a lot of opinions that are disguised as facts At times. Obviously, it can get frustrating and think for any of us. I'll give you an example. When people say Netflix is losing a lot of money, well no, they've estimated $5 billion of free cash flow this year. That's a number. People should know that. What is one thing maybe, dan, that you just wish the industry knew more, where you're just having to constantly educate something that you feel if the industry knew, we'd move along a little bit faster.

Speaker 3: 30:00

It's a great question. I think it's really the breadth of opportunity that exists in TV today and that, as we were just talking about now, it's not just hey, I could have this 15-second spot and bring it over to television, but that there is this whole streamer's journey from power on to purchase complete. That's an opportunity for our industry and the leading marketers are already jumping in and figuring out how they do new things and surprise and delight make themselves unmissable in a future where all TV is streamed. And I just always think that that's so exciting that we've got this opportunity to reinvent television for the 21st century, and we just were excited to be able to partner and continue to innovate with advertisers and the industry at large.

Speaker 1: 30:46

Yeah, you're saying, basically treat it like the experience of this on the platform. It is separate from broadcast. I haven't heard anyone say that before, but I like it. It's just. Is this a Roku saying of power on to purchase complete?

Speaker 3: 30:57

It is something we say a bunch because we really think about the entire consumer experience, not just the pieces along the way.

Speaker 1: 31:05

Right, no, that sums it up really well. I like that you guys should trademark that. Fair enough, start using it somehow in marketing or when. I like that. That's good. I mean, it really gives a clear vision of what you have as a company. Well, dan, we're out of time. I appreciate the opportunity to talk to you today, even just so briefly, and we could talk forever on so many of these facets of the overall topic in detail, but appreciate the time. If anyone would like to reach out to Dan, best way to reach out to him is on LinkedIn. Some reason you can't find them. Just reach out to me, dan, at danrayburncom. I'll be happy to make an introduction. Dan, thank you for your time today. Appreciate you coming, appreciate the listeners. I'll be back in another couple of weeks with another executive interview series. In the meantime, if you have any questions, please reach out to me at any time. Thanks very much for listening. We'll talk to you next week.

Speaker 2: 31:53

If you enjoyed the show, send it to a friend, have questions for Dan or Mark, connect with them on LinkedIn at any time, and be sure to check out Dan's blog at streamingmediablogcom.