Roku is beefing up its advertising business with the acquisition of Boston-based dataxu, a demand-side platform that will allow marketers to plan, buy and optimize their video ad campaigns that run on Roku’s devices and services. The deal, a mixture of cash and stock, is for $150 million and has been approved by each company’s board of directors. It’s expected to close in the fourth quarter.
The deal is meant to help Roku further grow its suite of tools for advertisers, at a time when its platform business is a larger contributor to Roku’s bottom line compared with hardware sales. The company today has over 30.5 million active users who watch via Roku’s OS either on Roku streaming media players or Rokus TV.
With the addition of dataxu, Roku will be able to provide advertisers with a data-drive solution they can use plan and buy their ad spend across Roku’s platform. The deal will also bring in dataxu’s experienced team, which includes talent in software engineering, data science, and analytics.
In announcing the deal, Roku noted that the market for over-the-top advertising will continue to expand as the cord-cutting race heats up. Today, advertisers send over $70 billion on traditional TV. Over-the-top viewing accounts for only 29% of TV viewing, but has so far only captured 3% of TV ad budgets. With more consumers adopting streaming, automated solutions will help to unlock those additional TV ad dollars, Roku believes.
“TV advertising is shifting toward OTT and a data-driven model focused on business outcomes for brands,” said Anthony Wood, chief executive officer at Roku, in a statement. “The acquisition of dataxu will accelerate our ad platform while also helping our content partners monetize their inventory even more effectively,” he said.