Roku to buy Dataxu, accelerating the push to expand its presence OTT

Roku will use Dataxu's legacy DSP as a full-funnel tool

Roku announced today (22 October) that it will acquire adtech company Dataxu for $150m, a deal that will see Roku take on more ad inventory outside of its own platform.

Alison Levin, Roku’s vice-president of ad sales and strategy, told The Drum that Dataxu’s existing tech and partnerships should further Roku’s capabilities to sell and measure OTT inventory outside of its platform.

“It really allows us to accelerate the success we're already seeing in OTT and move past Roku's platform to all OTT platforms, as well as desktop and mobile,” said Levin, which includes Roku's recently announced over-the-top (OTT) measurement tool that will eventually run outside of its walls.

The cash and stock deal to integrate Dataxu’s demand-side platform (DSP) into Roku’s existing ad business will also see the OTT service delve into other parts of the digital ad ecosystem.

The 10-year old Dataxu has spent the last year-plus pivoting to video following the launch of its TotalTV Marketplace, but Levin said Roku sees value in Dataxu’s legacy digital operations.

Levin said Dataxu’s self-serve platform, device graph and automated TV buying tools will all help Roku go beyond TV and take a full funnel, cross-device approach to advertising.

“We're… really committed to an omnichannel DSP execution to help marketers spend OTT first and foremost, [and] with desktop, mobile, display and video as well for a full funnel experience,” said Levin.

Dataxu has reportedly been on the market for around a year and had initially hoped to fetch around $300m.

Anthony Wood, chief executive officer of Roku, in a company statement said: "TV advertising is shifting toward OTT and a data-driven model focused on business outcomes for brands. The acquisition of Dataxu will accelerate our ad platform while also helping our content partners monetize their inventory even more effectively."

The deal will combine Roku’s 30.5m active accounts with Dataxu’s TotalTV Marketplace of more than 40m unique connected TV households in North America a month. The acquisition is expected to close before the end of the year.

Brian Wieser, global president of business intelligence at Group M, said Roku is finding a way to sell a broader range of OTT inventory

“Roku is buying its way into a capacity to trade programmatically and potentially expand their market for advertising,” said Wieser.

Roku won’t break down programmatic revenue from its overall revenue, but Levin said programmatic advertising is a fast growing part of its business.

“The huge benefit of this partnership is to move faster in automated buying,” said Levin.

It remains to be seen how Roku will work with other OTT inventory holders once it fully controls Dataxu, which has access to Amazon Fire TV inventory and underlies OpenAP’s advanced TV marketplace.

Roku would not comment on Dataxu’s relationship with Amazon until the deal closes, but Levin called Amazon a valuable strategic partner, both as a content provider on Roku’s platform and as a seller of Roku devices.

Alan Wolk, co-founder and lead analyst at TVRev, said it’s unlikely Amazon would open up its service to Roku’s ad serving system.

Amazon and Roku seem to be emerging as the one-stop-shop walled gardens of the streaming era, along with Comcast’s Freewheel and AT&T’s Xandr, which recently acquired TV adtech start-up Clypd.

However, Wolk pointed out that advertisers have more choice and flexibility in OTT compared to the duopoly in digital.

“The advantage Facebook and Google have in digital is that there are really no other options,” said Wolk. “Once people have other options the walled gardens have much less opportunity to keep people inside their walls.”

Levin said Roku is committed to being an open and transparent platform, and that there’s plenty of opportunity for competing services in the OTT where, according to Magna Global, OTT accounts for 29% of TV viewing but only 3% of TV ad budgets.

“There's opportunity for a lot of players in this space,” said Levin. “We believe that we will be one of the strongest, if not the strongest one in the space, because of [our] access to 30m-plus active households with proprietary data, and our maniacal focus and commitment on making the best OTT streaming experience.”

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