Roku on Tuesday said it agreed to buy Dataxu, a demand-side advertising platform, for $150 million in cash and stock.
The acquisition will give Roku new tools to let advertisers plan and buy using programmatic technology ad campaigns to reach Roku’s streaming and over-the-top viewers.
“TV advertising is shifting toward OTT and a data-driven model focused on business outcomes for brands,” said Roku CEO Anthony Wood. “The acquisition of dataxu will accelerate our ad platform while also helping our content partners monetize their inventory even more effectively.”
Ad tech and data firms have been merging and getting acquired as demand for over-the-top and streaming video advertising grows. Last week, AT&T’s Xandr unit said it was buying clypd, another ad tech company.
According to media buying firm Magna Global, OTT accounts for 29 percent of TV viewing but so far has only captured 3 percent of TV ad budgets. As viewers continue to migrate to streaming, automated media buying solutions are expected to unlock more advertising investment into OTT, Roku said.
The consolidation of ad data and tech has sparked questions about what the industry will look like in the near future.
"Roku acquiring Dataxu is a complex deal to unpack. On one hand, it's supportive of Roku's aspirations to compete with Amazon and Google. Roku now looks a lot more like those guys. They sell ads. They have a data walled garden. And now they have a self serve buying platform," said Frank Sinton, founder and president of Beachfront, a video ad management platform.
"On the other hand, there is economics conflict between the Roku and Dataxu businesses. Demand-side platforms work for ad buyers with a goal of driving prices down. Roku is in the business of increasing the yield of its inventory. It will be interesting to see this complex dynamic shakes out. Additionally, it remains to be seen what Roku's strategy will be in terms of monetizing third-party OTT inventory, which will be an interesting development that will impact the broader industry," Sinton said.
Others saw consolidation as a more positive force.
“We continue to see a lot of consolidation in the next generation of TV advertising space, as major players are lining up total solutions – WarnerMedia with Xandr acquisition, and Comcast/NBC initiative, noted Aman Sareen, CEO of ZypMedia. "We continue to see strong and robust growth and believe that the future for demand-side-platforms is linked to strong integrations and relationships with inventory owners, and strong trusted channels with large national and local advertisers."
"This is a great buy for Roku. They already have one of the largest household audiences with 30mm active account. Dataxu will not only enable them to offer self-service capabilities, but it will also expand their supply side representation. It’s encouraging to see the continuation of the demand getting closer to the supply,” said Morgan Rigsbee, VP, Product, Programmatic at Fluent.
Roku's acquisition agreement with Dataxu has been approved by each company’s board of directors and is expected to close in the fourth quarter of 2019, subject to customary closing conditions, including regulatory approvals.
Roku will discuss the acquisition on its upcoming third quarter financial results conference call.