Roku is buying Nielsen's advanced advertising business, which will allow the popular streaming platform to add more hyper-targeted advertising capabilities.
Specifically, the deal calls for Roku to acquire Nielsen's Advanced Video Advertising (AVA) business, which includes Nielsen's video automatic content recognition (ACR) and dynamic ad insertion (DAI) technologies. Terms of the deal were not disclosed and the sale is expected to close in the second quarter of this year.
The DAI tech is what will allow Roku to insert ads that are more targeted to consumers, which is known as "addressable" TV advertising. Essentially, this allows sponsors to target consumers down to the household level and break down viewers by a much wider swath of categories such as income level, lifestyle and shopping interests. This is much more granular than the age and gender demographics that Nielsen typically measures -- and could lead to consumers seeing different TV commercials than their next-door neighbors.
The system has gained prominence thanks to the advent of connected TVs and streaming devices. According to eMarketer, addressable TV advertising spend will reach $3.6 billion by 2022.
In addition, Roku and Nielsen are signing a separate multi-year agreement that will allow Nielsen to incorporate Roku ad data into its upcoming cross-media measurement product. Roku had more than 50 million active accounts as of the end of 2020.
In December, Nielsen announced plans to combine linear and digital viewing into one number. This, Nielsen expects, will become the new industry currency metric. Nielsen ONE will launch in the fourth quarter of 2022. The "intention" is to "fully transition the industry to cross-media metrics" by the Fall 2024 TV season, according to the ratings currency company.
"Tens of billions of dollars continue to be spent annually on traditional TV advertising," Louqman Parampath, VP of product management at Roku, said. "Combining Nielsen's AVA technology with Roku's innovative ad tech and scale will enable us to deliver the benefits of TV streaming advertising to traditional TV. Roku will bring the promise of DAI to the market for the first time ever at scale -- providing better targeting and measurement for advertisers, creating easy integration and additional revenue opportunities for programmers' ad sales teams, and improving the TV experience for viewers. We're also excited to become a key strategic partner for Nielsen in their new cross-media measurement products, and jointly drive toward greater transparency and accuracy in TV streaming measurement."
"The measurement of ads and content on Roku devices will accelerate the path to a single, deduplicated cross-media currency," Scott N. Brown, GM of audience measurement at Nielsen, said. "As Roku brings the power of dynamic ad insertion to all forms of TV, we're excited to help monetize the addressable market by measuring smart TV as a currency, which Nielsen can do at scale."