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Next in Media
How Roku Is Powering the Next Wave of CTV Advertising
00:28:09
In this episode, Roku’s Head of Ad Innovation Peter Hamilton joins Mike Shields to unpack how connected TV (CTV) is transforming advertising. They discuss the rise of new advertisers—from digital performance marketers to small businesses—and why onboarding SMBs at scale is tougher than it looks. Peter explains how Roku is building tools like self-serve ad platforms, “OK to Text” interactive ads, and AI-driven creative testing to make TV more measurable, shoppable, and data-smart. The conversation dives into CTV’s growing role as the next frontier after Facebook and Google, where brand building meets performance.
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- [00:00]
A
I was thinking this was going to happen even sooner than it's happened now. But I will say that there was a baseline foundation of technology and platform that just you had to lay the.
- [00:10]
B
Tracks a little bit. There's fundamentals of marketing still remain true. Right. You still got to do that stuff.
- [00:16]
A
That's right.
- [00:17]
B
Even though the funnels are more collapsed and we're going to die like that, you still got to build your hand a little bit.
- [00:20]
A
And now I'm seeing like, you know, dozens of software products and things trying to help DTC companies with that exact pursuit. How do you find new audiences? How do you establish a new path of Dr. How do you not find yourself sort of addicted to one channel? It sort of wakes up the viewer in a certain way. Like, oh, I, I can, I can just press okay right now on this.
- [00:45]
B
Thing and I deal with it when I want to. Right. I can, it's on my own times, my own timeframe when I want to make a move. This week on Next Immediate, I spoke to Peter Hamilton, head of ad innovation at Roku. I asked Peter about all this recent noise surrounding the seemingly slow adoption of TV advertising by smaller brands. Whether analysts like Brian Weiser are wrong in their assessment that CTV is growing more slowly than anticipated. Peter and I also talked about Roku's big deal with Amazon and how we think shoppable TV ads will become normalized over time. While I have you, I wanted to thank Savio for becoming my latest sponsor. Lots to get into so let's get started. Hi everybody. Welcome to Next in Media. I'm Mike Shields and I'm here with Peter Hamilton. He is the head of head of ad innovation at Ro Roku. Hey Peter, thanks for being here.
- [01:29]
A
Hey, sorry for the mouthful. Yeah, thanks so much for having me. Excited to chat.
- [01:34]
B
You are one of the rare returnees. This is your second time on the show, which is, which is I, I would credit that to your beautiful podcast.
- [01:42]
A
Voice but there it is.
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B
Yeah, there's also just lots to talk about and so I'm glad you glad we're doing this. A bunch of different directions I would love to go here but the, I think the sort of the bigger stories in TV or the one that we want to be a big story is this idea that all these new advertisers are going to come to television soon if not already. You know where so many companies are touting their self serve product or their product built for this, these broader base of advertisers yet some of the numbers aren't showing it Yet. Why is that, do you think?
- [02:19]
A
Well, for Roku, it is growing very, very fast. You're seeing a new advertiser category emerging and we've got lots of different parts of our revenue that make up our total platform revenue. And this area is the fastest growing. And so we're very focused on it and very excited about it. I think the misnomer for a lot of these platforms is that there is that they think there's just going to be this onslaught of SMBs that is going to sort of make up, you know, some, some really fast, you know, revenue opportunity. And the reality is that onboarding SMBs is challenging. You need to onboard thousands, if not tens of thousands or hundreds of thousands for that revenue to make the distinction.
- [03:12]
B
I think I know what you mean. But when used, because people use these terms interchangeably, like in terms of who the new advertiser is going to be there, it's going to be either these like DTC brands arose Instagram, it's going to be small businesses that have been on Facebook or something else. What, what is the, what are people expecting? What's, what's reality?
- [03:31]
A
Maybe, maybe the simplest way I would define two major groups would be to call them digital performance marketers.
- [03:39]
B
Yeah.
- [03:40]
A
And mom and pop shops. Okay, right. That mom and pop shops. You know, they advertise in the newspaper, they advertise with local radio. They advertise now in social and in search for sure. But they don't have a sophisticated marketing team. They don't have a very large marketing budget.
- [04:02]
B
Right.
- [04:03]
A
They have not sort of put in the practices to build evergreen marketing channels. You know, they sort of turn on marketing channels when it makes sense and when they think that it's helping them and then they turn them off. So it's a little bit less scientific in many cases.
- [04:19]
B
And this is like throwing Facebook ads on the credit card, Google, Google search ads, those kind of people.
- [04:24]
A
That's exactly right. Right. Whereas the digital performance buyer is very sophisticated in its methods and its measurement is doing its own analysis on, you know, revenue impact, their total roas and their lift and regression analysis. They might be doing incrementality analysis and geo holdout lift studies and all.
- [04:48]
B
They are like the opposite of what you described. They're very data sophisticated in terms of ROI and TV and media measurement.
- [04:55]
A
That's right. That's right. And, and that group, the digital performance buyer, is the one that we're seeing move more heavily into ctv.
- [05:04]
B
Okay.
- [05:05]
A
It is the one that knows how to build a new channel. You know, they test and test and test and figure out what works and what doesn't. It wasn't until very recently, like with Roku Ads Manager, where you can set up a campaign with no minimum commitment so they can create as many campaigns as they want and test them and turn them on and turn them off and do whatever they want to do to figure out what creative was working best, what kinds of targeting is working best, how it is that they're using our algorithms to perform the best. All of those things are, you know, pretty recent in terms of their availability in ctv. And there is sort of a minimum bar that they expect, you know, from an ad platform to be able to get the data in and data out that they need.
- [05:51]
B
Maybe it's not going to be Instagram, but it's, it's got to have some level of optimization and targeting and stuff. It's not going to work for them.
- [05:58]
A
Yeah. And so like, so we're building for that group, right? At the same time, we're bringing on SMBs by the thousands. It just takes thousands of SMBs to make enough revenue, right. Because each of them is going to have a small average revenue per account to have a meaningful impact on your, on your overall. And so a lot of these platforms have sort of focused on this SMB target and they might be even bringing on, you know, you know, hundreds or thousands of these advertisers, but it's not having a huge impact to their bottom line because the, the sheer ability to do a go to market that brings on say 100,000 human souls to spend money on your platform is, is difficult to do. And it will happen over 10 years. Those people will come on and it will amass and it will be a very meaningful portion of revenue. But in the short run, we know that there's very available dollars coming from digital performance. They have sort of saturated in many cases on search and social. Right. They're looking for another way search. We're also having some issues with search, right. And they, you know, they look for like, how, how am I going to create something evergreen that I can, that I can, you know, really count on over time? But they've sort of like sucked up all of those Dr. Audiences that live on search and social. And so now they need to sort of broaden to more audiences. They need to do a little bit more consumer education. The consideration part of the funnel is becoming the new doctor in many cases they're like, well, you know, we already got all the people that knew they wanted our product once we hit them right now. We got to like actually build consideration and get them to buy right away. So Dr. Is kind of moving up funnel on its own and. Yeah, so that's what we're seeing. And it's an exciting time to be in ctv. It's the reason I came to CTV in the first place. I was thinking this was going to happen even sooner than it's happened now. But I will say that there was a baseline foundation of technology and platform that just.
- [08:14]
B
You had to lay the tracks a little bit. Um, I'm gonna come back to a couple things you said there. But you see, like, so this, you're seeing this. Maybe it's just not. It's gonna be a little a minute before the broader analyst world sees it. Because this is coming from. You probably read Brian Weezer from Madison Wall. He, he's been, you know, he's like a, I don't wanna call him cynical, but he, you know, he'll, he's not afraid to throw cold water on, on things, doesn't buy. He's saying, I don't see television getting a lot of net new brands. It's what you're going to see is local brands moving from local TV to streaming. That's. Maybe that's happening, but that's not. You're, you're seeing and you know, that's.
- [08:57]
A
Also happening for sure.
- [08:58]
B
That's not a bad thing, by the way.
- [08:59]
A
Not a bad thing. And that's going to continue to grow again. It won't be a tsunami of revenue for anyone. It will take time to sell. Um, but yeah, no, I mean, if, if you spend any time, say in the mobile app advertiser ecosystem, CTV is probably the hottest topic, one that's being talked about the most and one that's being invested in and expanded in the most. So I don't know, like how you're missing that whole group for sure. I think it's still unproven for D2C. It's kind of early. You know, there's lots of growth still to come for D2C and there's lots for us to understand about, you know, shopability on TV and, you know, how it is. We can connect those dots better. But I mean, I, I, you know, have known tons of D2C advertisers that sort of built their business on Meta as an example. Yep. And then they sort of got to their threshold of what they could do and they realized they didn't do any brand building consideration building. They basically just have their one kept audience.
- [10:02]
B
Yeah.
- [10:02]
A
And now.
- [10:03]
B
And there there's the fundamentals of marketing still remain true.
- [10:05]
A
Right.
- [10:05]
B
You still got to do that stuff.
- [10:07]
A
That's right.
- [10:08]
B
Even though the funnels have all collapsed and we're all going to die like that, you still got to build a brand a little bit.
- [10:12]
A
And now I'm seeing like you know, dozens of software products and things trying to help DTC companies with that exact pursuit. How do you find new audiences? How do you establish a new path of doctor. How do you not find yourself sort of addicted to one channel with one audience, you know, for one kind of outcome? Because over time it will start to get more expensive and it will start to saturate and, and then where do you go from there?
- [10:41]
B
Freemantle, one of the world's most prolific creators and distributors of premium content such as America's Got Talent, the Price Is Right and Family feud, reaching over 100 million US households, leverages Elemental TV's AI powered one audience platform to offer advertisers access to its extensive library of iconic titles all through a leaner optimized supply path. Lesser intermediaries enabling increased brand safety and more cost effective campaigns. Discover how@elementaltv.com oneaudience that's E L E M E N T A-L-T V.com O N E A U D I E N C E One of the things you mentioned, like it's, it's with all these platforms it's going to take time because you've got to rack up a lot of small numbers to make big numbers. One thing that I think is interesting, you mentioned the SMBs you talked about. It's easy for them. They all know Google and Facebook, right. Because they use them personally. While TV is like fragmented I guess is about. But how do you get without. I guess you're a consumer brand which is an advantage. But how do you can turn this on and open your doors up? But how does everybody get these folks? You got to let them know you're out there, right?
- [11:57]
A
Yeah, I mean you gotta, you gotta build the B2B marketing machine that, yeah, you know, that you know Meta built early on and that TikTok has had to build and everyone's had to build, right? Yeah. And so yeah, we're, we're fast at building that, that B2B marketing muscle and that means, you know, from advertising channels and sponsorships and content and you know, all of the, you know, supporting case studies and materials and press that you're gonna, you know, that are, that are gonna come together here. But then it's marketing automation and it's follow up and it's onboarding and you know our, if you go and sign up for Roku Ads Manager now, you know, you just as.roku.com and you, you put in an email address basically and we like, you know, get you in the door and then we might need to use our software to help you, you know, keep moving down the funnel so that you, yeah, so you spend your first dollar and that's, you know, that's the, it's, it's not as easy as it looks.
- [12:57]
B
Do you have any good examples of some brands that have come on in a, in a more, in a unexpected way or just a bigger way on the kinds of things they're doing?
- [13:05]
A
Man, I wish I, I, I wish I had some like fresh, fresh case study I could share with you. We've got some that are coming soon that I'm, I'm very, very excited about. Most of this in, is in the mobile category.
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B
What about fatty 15? Who are those guys?
- [13:19]
A
Fatty 15 is a great D2C example. Right. So you know, in the health supplement space and you know, we've got lots of great DTC examples with our Shopify integration where you just like you connect your Shopify merchant account with Roku Ads Manager, it pumps, you know, all of your conversions right in so we can optimize toward purchases specifically and then you can also actually purchase on tv which is pretty wild. But yeah, with someone like that, you know, we saw very quickly results. They started to see ROAS at 120%. We saw a really high intent in the cart. So you know, out of four cart ads that would happen, one of those would end in a purchase which is a, which is a high intent cart. But, but then on top of that they're getting that sort of mid and upper funnel activity that we were talking about, you know, for they're getting sort of cost per page view at like 40 cents, you know, on the dollar. They're getting a cost per unique household reach at like 3 cents. Right, right. So I mean that's incredible reach even for social. Yeah, so, so yeah we've seen, we've seen really great, you know, collaboration and results with our performance algorithms for those kinds of advertisers. And all they're doing is they just, you know, they say this, I want to drive toward conversion or page view or whatever it is and they're letting our algorithm go and find what's the right impression to the right user to serve to, so that we're going to optimize toward that conversion just like you would expect, you know, with Social.
- [15:00]
B
Are there any, you know, again, it's pretty, you know, it's pretty early. Are there any key takeaways? Is there anything like, is there anything holding things up other than, you know, do you just need more inventory, more liquidity? Like what's kind of, what are some interesting takeaways so far?
- [15:15]
A
Well, right now we, we've got a lot of inventory. Roku, you know, is in half of American households. We have our own and operated inventory. You know, we've got our inventory shares with all of our app partners that are on the platform. And so we, we really do have like, you know, some of the best inventory available. Um, so really it's more about just getting folks in the door and testing, you know, once they, once they test, we're able to see like what's the benchmark we're working from and let's build performance from there. And that's worked very, very well for us so far.
- [15:50]
B
I want to step away from this all small advertiser conversation a little bit, but maybe, maybe this is sort of in the same neighborhood, but there's. You bet. You've had a lot of news lately in the last couple months. I think the one that was around Cam, which really kind of opened a lot of people's eyes, was you made a deal with Amazon, which I think people sort of wondered, whoa, aren't they like, aren't they enemies? Aren't they, you know, doesn't. Are, are, aren't. Isn't TV trying to go the walled garden route and isn't this working with another walled garden? Like, how should people think about that deal? What does it mean?
- [16:21]
A
Sure. Well, you know, Roku is a TV company. You know, we're not a commerce company. We're not going to be a commerce company. So Amazon has sort of a different approach to their advertising platform. And it is very commerce first. And we think there's a lot of opportunity of demand that's very specific to Amazon. We also have made it clear that we're not trying to be a buy anywhere dsp. So as it relates to, you know, how we operate with holding companies and you know, all of our, you know, Fortune 500 clients, we want to be, we want to meet them where they are, we want to make it easy for them to buy Roku, wherever that makes sense. And Amazon going into this dsp, you know, path means that they're another that we're going to partner with. And it just so happens, of course they've Got phenomenal conversion data and interesting data about, you know, Amazon users and for them to be able to use that data when they buy on Roku, you know, is sort of their advantage. That's, that's why they have a DSP and that's, that's why the right, they're, they're, they're trying to, to grow it. So yeah, we're just being helpful in that path. You know, it's not like we're sharing a bunch of information about how viewers are using their Roku devices back with Amazon. Right. It's about how Amazon connects their data to our users so that they can make sure that they buy the right impression for the right user at the right time.
- [17:51]
B
So I think, yeah, I think people wonder, well, don't, you know, don't you have a, you're, you have your own ad tech, your own identity graph that's your competitor. But this is a, in, this is a different demand source, different kind of identifier that is complimentary.
- [18:07]
A
That's how we see it. And we have, honestly we have lots of sort of competitive and complimentary types of demand sources on Roku.
- [18:15]
B
I mean that, that is this industry in a lot of ways.
- [18:17]
A
Yeah, yeah, exactly. So we want to remain open and we want to have a partner first approach in general. And you know, we think that that's, you know, a rising tide that lifts all boats eventually and we want to, yeah, be, be helpful for advertisers that prefer the Amazon dsp.
- [18:35]
B
Like I mentioned, you've had a lot of news, couple of interesting other announcements. I'm going out of order here. But you, in the past, what, six months or so you've purchased a streaming service. There was a little maybe under the radar and you've also launched an ad free one. Tell me about those two things.
- [18:50]
A
Sure. Well, the first one you mentioned is called Friendly and very exciting streaming service. You know, we're seeing more and more, you know, viewers looking for packaged up bundles of linear channels. And so, you know, they're trying to consolidate and, and lessen their, their total entertainment budget. And Friendly is a great example of that. We think, you know, they, they make a, a great addition to, you know, so our family of products and our family of content on Roku.
- [19:25]
B
So what does that influx of ad inventory allow you to do?
- [19:29]
A
So? So Friendly is still, you know, primarily subscription service. So let's less focus on ad inventory and you know, Roku is continuing to, to grow its total subscription revenue and that would be with both, you know, properties that we participate in directly or that we own as well as through all of our subscription oriented partners. This just gets us, you know, the opportunity to, to eat our own dog food, to be really, really great at driving subscriptions. And you know we are the lead into television with our home screen and so you know, we can experiment with showing this in front of the right users and, and see how they respond and then see, think about how this also can be valuable to our other partners. So again we're still keeping that sort of open platform approach while eating our own dog food and hopefully growing from that. And then the other service that you mentioned is Howdy, which we launched our own low cost ad free streaming experience and that comes at 299amonth. And bottom line is that there's no other premium streaming service that has these offerings at this price point. And, and there's, there's just, there's just great shows that we think a lot of our audience wants to have access to. And whenever you don't want know what to watch, this is a great place to go go hunting through some really amazing archives and licensed content and, and yeah, and so we're going to be continuing to learn from that and think about how that helps our entire ecosystem.
- [21:04]
B
Wanted to come back, you had mentioned some of the newer performance brands and the shopability that's built in super early still in that state. You do see a lot more on my screen. I will say that you're seeing a lot more prompts to either add to cart, get more information, all that stuff. What can you tell us about the convergence of shoppable ads and CTV where things are headed? What's the latest?
- [21:31]
A
Sure. I mean our really best path is what we call okay to text. Where someone presses okay on a commercial or on an ad on our home screen and they can send themselves a text. Text open rates are super high. There's a utility part of it via the remote. Right?
- [21:50]
B
That's the easy way to do.
- [21:50]
A
That's right. Yeah, that's right. Yeah. You just use the Roku remote, press ok, send yourself a text. And we just find that you know, viewers see texting as a utility that's used for something like that. Just like when you're texting with your hotel concierge. Right. Or your meal reservations. Right. This is just a, a little bit more normalized way to interact with another surface. And so it's worked very, very well. We are going to continue to make lots of innovations in that category. So excited about more that we'll. That we'll provide there. But you know, extending those into more and more places, extending that into fast live content is important. You know, that's where a lot of tonnage is happening and we want to be able to, you know, capitalize on, on actions that can come from those places. But yeah, response rates on these things are great. We see benchmarking at 0.8% to 1%. It's, you know, it's pretty great for.
- [22:54]
B
A new behavior, right?
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A
I mean, that's exactly right. Yeah. And we think consumers are only going to get more and more used to it and they'll continue to vote and tell us what else they want from it. But excitingly, we've actually put this okay to text behavior into our self serve platform. This used to be something you had to set up, right, Like a quarter in advance and manage service.
- [23:20]
B
The big brands were negotiating ahead of time kind of thing.
- [23:23]
A
Negotiate ahead of time. You have to, we go through a managed service and get it all set up and run it over a quarter and all those kinds of things. And now literally you can just sign up for, you know, our ads manager and you can put okay to text in place. You can put the destination URL that you want to send to the viewer when they press. Okay. Yeah. And you can put your own text around it, you know, your own call to action and all that sort of thing. And really it's the first time you've seen that happen that kind of an ad format exist for ctv. Yeah, on a self service basis.
- [23:56]
B
So that's because that's key. It's great to have tests, but you need to have to habituate people. You need to see these kind of ads frequently. And that's where your scale of advertisers is going to help push that behavior, you would think.
- [24:10]
A
Yeah, that's right. And you know, we'll continue to play around with, you know, the formats themselves and know how they move and how they look and how they work and all that sort of thing. But at the end of the day, the video creative is the thing that's going to make people smash the button.
- [24:23]
B
Right.
- [24:24]
A
And so we have learned a lot about what it takes to get people to smash a button and want to learn more. And you know, you've got to have a clear call to action. You've got to have someone, you know, speaking to the audience very clearly. You've got to be persuasive like any advertising would need to be. Sure. And, and we love it when advertisers, you know, sort of go the extra Mile and say we're going to actually have this ad reference the action press okay on your Roku remote. And that is, you know, it sort of wakes up the viewer in a certain way. Like oh, I can, I can just press okay right now on this thing.
- [25:02]
B
And I do it when I want to. Right. I can. It's on my own times, my own timeframe when I want to make a move.
- [25:07]
A
That's also right. Yeah. And we see that people come back to their texts, you know, hours or days later often. And it's just something that, you know, you, you generally, you close out all your tests and you figure that out and it. And again, this is not old school text message marketing. We're not just like sending text messages to people to like, you know, you know, get them to give us money or whatever. We're, we're sending text messages because they asked us to.
- [25:34]
B
Right, right.
- [25:36]
A
They said it's not. We, we said press okay to get a text. And they said, oh yeah, I want to do that. Yeah.
- [25:42]
B
So yeah, like you said, it is becoming fully normalized behavior. Last one for me is that you're with all this, you know, talk about new self serve advertisers, newer base. The promise is a lot of these guys will be able to build commercials via AI very easily. Still seems pretty experimental. Are you seeing any real examples of that yet?
- [26:03]
A
We've seen a lot of experimentation on our platform with it for sure. As you'd imagine in self service got lots of advertisers that want to try out, you know, know, you know, say 10, 20, 40 different video ads.
- [26:15]
B
Okay.
- [26:16]
A
We see you know, the sort of AI spokesperson or AI avatar kind of thing be the most common where the spokesperson sort of breaking the fourth wall and talking about the product. We of course have worked with lots of different creative partners here too. We have some creative partners in that category like with space back where they're taking, you know, social posts and they're turning them into video creative. So you know, there's lots and lots of experimentation in that area. Roku's taking a position again that we're, we want to be an open platform. We want to accept creative of all kinds and all types and you know, let the best creative win. And what, what, what is on us is to make sure we get the data back to the advertiser as to what's performing and what's not. That means like, you know, we're both collecting conversions in a really streamlined fashion through industry standard Capi conversions, API type of mechanism. And then reporting APIs straight out in real time and getting that back to people. And as long as we can keep that loop as real time and connected as possible, then it should lay the groundwork for AI creative to really start to evolve and and optimize itself over time even.
- [27:35]
B
I mean, you know, things have changed when we're talking about CAPI and APIs intelligent advertising. So yes, definitely better than we made it. Yes. Peter, awesome stuff. Great conversation. Thanks for all the updates and we'll talk again soon.
- [27:49]
A
Really appreciate you. Thank you so much.
- [27:51]
B
Thanks again to my guest this week, Roku's Peter Hamilton and my partners from sabio and Elemental tv. If you like this week's episode, please take a moment to rate and leave a review. We have lots more to bring you and please hit that subscribe button and we'll see you next time for more on what's next in media. Thanks for listening.