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Is Advertising Driving Roku's Fantastic IPO Launch?
What happens when companies take their advertising stacks into their own hands and stop relying on exchanges for revenue? Just ask Roku. The company is a glowing example of how advertising can still drive growth for media companies and platforms.
Roku’s first day of trading saw stock values skyrocket by 67% (it’s now up another 20% at the time of writing). Everyone talks about Amazon and Apple in the internet-TV space, as well as the advertising models associated with over-the-top (OTT) products and platforms. But Roku often goes unmentioned around adtech circles.
When you dig into the numbers, Roku is doing a lot right. I’ve always been surprised by how far under the radar they’ve flown, considering the company’s tremendous success.
Some interesting numbers popped up in the company's Prospectus Summary:
As of June 30, 2017, we had 15.1 million active accounts. By comparison, the fourth largest multichannel video programming video distributor in the United States had approximately 13.3 million subscribers as of June 30, 2017. Our users streamed more than 6.7 billion hours on the Roku platform in the six months ended June 30, 2017, 62% growth from the six months ended June 30, 2016…
In fiscal 2016 and the six months ended June 30, 2017, respectively, advertising revenue represented 63% and 67% of total platform revenue.
Roku’s monumental growth over the last couple of years stems from its “Switzerland” approach to partnerships with media companies and its fantastic use of advertisements across its platform. While it welcomes everyone onto its service, Roku’s monetization efforts have had the biggest impact on the company's growth.
If you’re looking for use cases or a company that’s doing advertising right, look to Roku. The company gets it.