Inside Roku’s Journey From Startup to Streaming Power Player

Today, Roku is the biggest player in connected TV.

This week, the company reported it added 1.6 million active accounts in the first quarter of the year, reaching a total of 71.6 million active accounts. Streaming hours also jumped to 25.1 billion, a 4.2 billion year-over-year increase. Overall, Roku’s data shows that 50% of all AVOD impressions happen on its own platform.

Just eight years ago, the company’s now billion-dollar ad business started with seven employees working in a small office above mattress store Sleepy’s on 34th Street in New York City.

Though the company’s ad sales business eventually made deals with every major holding company and has a commanding presence in the upfronts, serving most Fortune 500 brands, that growth didn’t come easily. It rarely does.

Adweek sat down with three executives who’ve been on the ground since the beginning to learn how Roku made its way into half of the broadband homes in the U.S. and became a hot commodity for brands and marketers to buy into.

Humble origins

Founded in 2002 by Anthony Wood, Roku set out to revolutionize streaming before the concept even existed. But to get there, it needed the help of advertising dollars.

The company spent the first months of its fledging ad business working to educate the market, much of which viewed streaming as a passing fad. In fact, one potential partner thought the team worked at Sushi Roku—a Japanese restaurant.

Alison Levin was Roku’s first hire in ad sales. She joined the company after already having experienced selling connected TV at Tremor (now Unruly) for brands like Samsung and LG.

“We kept seeing connected TV was performing better than desktop, better than mobile, and from a brand perspective, the audience was growing,” Levin said. “But no one was talking about it.”

Roku called Levin about a business development role designed to add inventory and channels, but no sales team existed. After initially declining the offer, Levin joined right before Roku announced its first partnership with Nielsen to bring its Digital Ad Ratings offering onto the platform.

Dan Robbins at Nielsen led the deal, eventually joining Roku himself and becoming its vp of marketing and partner solutions.

Levin described the first ad sales office as “almost like a frat house,” meaning it was a collaborative environment where the seven employees took turns taking the garbage out.

“It was as startup as startup could get,” Levin added. “We weren’t fighting for a share. We were literally creating the opportunity. We had to bake the pie before we could get our own slice of the pie.”

Roku slowly began making inroads in the marketplace and found that top media buyers actually had Roku devices of their own.

“Once they saw it, they got it,” said Levin. “This dynamic still exists today. Even though we’re the number one TV streaming platform and half of U.S. households have Roku devices, we had a coastal situation where media buyers didn’t understand, see it or feel it.”

People don’t realize how new we are to the NewFront. We’re often compared to businesses that have been around for 50 years.

Alison Levin, VP Ad Sales and Strategy, Roku

That led to a strategy of traveling across the country to take meetings and plugging in devices to demonstrate the product.

Later in the year in 2015, Roku landed a meeting with the McDonald’s CMO. Unfortunately, the executive wanted to come to the startup office in New York.

“I panicked and got a tablecloth and flowers and tried to make the place look even decent,” Levin said. “She walked in, and I swear she thought we were going to kidnap her. She was like, ‘This is Roku’s headquarters?’ Full horrified.”

But the CMO left impressed and told Levin’s team to give her a call when the company hit 10 million active accounts. McDonald’s is now one of Roku’s major partners.

One year later, Roku signed its first upfront partnership, teaming up with Magna.

“We left and walked down Sixth Avenue and were screaming of happiness,” said Levin. “That was the moment we really started to move with the major holding companies.”

The product evolution

Levin’s team wouldn’t have been able to lock down deals with McDonald’s and Magna without a solid platform to offer.

Louqman Parampath, Roku’s vp of product management, advertising, joined around the same time as Levin in 2015, knowing the opportunity was in video advertising and developing ways to monetize apps on the platform.

“We knew our differentiation was going to be around targeting, data and identity,” Parampath said. “Every Roku user was a logged-in user, and that gave us the ability to accurately reach a user.”

Roku initially started with third-party technology in order to scale, using Google as its ad server, but quickly realized it needed to take its tech in-house (which Parampath thinks will be the pattern Netflix soon follows).

A lot of Roku’s earlier deals were with traditional brand buyers, which is why a partnership with Nielsen made sense. Roku became one of the first platforms to integrate ACR data, and in 2019 acquired Dataxu, which became the company’s OneView platform.

At the time, Roku had not yet launched Roku Originals or its AVOD offering, The Roku Channel. This meant the company had no access to video ad inventory. Instead, the company worked with clients on content distribution agreements for a share of inventory to aggregate and sell in an addressable manner, integrating it with the Roku Ad Framework. That made it so the publishers could share that percentage of their ad inventory in a targetable way.

“When we enabled DAR (Nielsen’s Digital Ad Ratings), we did it for every publisher on the platform because the goal was to not just make Roku successful, but to make CTV successful,” Parampath said. “Anything we built for our own media, we tried to make it available for publishers.”

The company has a simple mission: make “streaming better,” according to Robbins.

“We’ll all be better off when we can make streaming better for everybody, and we’ll all be better off when we can make the consumer experience better and share it with our partners and our advertisers,” Robbins said.

No time like the NewFronts

It’s no secret the market has become saturated. Still, Roku deliberately decided to stay in the NewFronts instead of moving to upfront week this year, marking the company’s second time at the IAB event. And Robbins teased a “bunch of firsts” were on the way in the May 2 presentation at Chelsea Factory.

Levin said the company “debated quite a bit” if it should move to upfront week instead, ultimately deciding against it.

“As a marketer, how can you actually figure out how to plan for Netflix or Disney or anyone else if you don’t understand what the foundation is?” Levin said. “We want to be in the NewFronts because we want to help marketers understand the size of the platform, how you can reach consumers and how can you become unmissable however they’re watching,” she said, adding that the company has a “real reason” to go ahead of others.

“People don’t realize how new we are to the NewFront,” Levin said. “We’re often compared to businesses that have been around for 50 years.”

The future is shoppable

As for where it goes from here, Roku is having a shoppable moment.

The company became one of the first streaming platforms to fully lean into shoppable experiences. It recently announced a partnership with Instacart designed to help CPG advertisers make TV advertising more relevant and performance-driven. The deal combines viewership data from Roku and insights from Instacart, which allows marketers to quantify the impact of TV streaming advertising on product sales.

Initial results have been strong. For example, in a pilot with a personal care brand, 60% of customers that purchased the brand after seeing the Roku campaign were new to the company. For a beverage brand, new purchasers had a 70% higher repeat rate than the average new-to-the-brand buyer on Instacart.

The Instacart deal adds to retail partnerships with other brands like Microsoft, BestBuy, Cox Automotive, DoorDash, Kroger, Walmart and others. Shoppable was a huge selling point for Roku in its 2022 upfronts pitch, and advertisers can expect to see more of that heading into the 2023 deals.

“We want marketers to understand the lower funnel, measurement and outcomes of their campaigns beyond what we can measure on our own, and those partnerships have been incredibly successful,” Levin said.

The shoppable offerings have also been attractive to early partners like Unilever, with Unilever’s head of media investment and partnerships, Aaron Sobol, specifically referencing Walmart and the click-to-buy offering and Roku’s DoorDash deal.

“They tend to innovate with the likes of DoorDash, and if you think about some of our brands, [we] love to see how shoppable in the living room really performs in an on-demand environment,” he said.

Roku is planning to announce new ad experiences, new brand integrations, content and more at its NewFronts presentation Tuesday. Last week, the company announced a primetime reach guarantee, meaning Roku is guaranteeing it will reach more consumers than the top five average cable network shows.

“We’re running multiple tests on this and have consistently out-delivered the cable networks on reach,” Levin said. “The last thing you were holding on to with cable is the fast reach, and we can deliver that better than cable.”