Roku and Amazon Partnership: A Game-Changer for Advertising, Consumer Experience, and Programming

In the world of streaming entertainment, where you can watch just about anything you want any time you want, the question "Hey, what's on TV tonight?" may seem quaint. However, in the new era of CTV (Connected TV) streaming, two major players are joining forces to revolutionize the way we watch TV and how advertisers reach us. Amazon and Roku have announced a partnership that will see Amazon's demand-side platform placing ads on top-viewed platforms like the Roku Channel and Amazon Prime Video, as well as other services available via Roku and Amazon Fire TV operating systems. The alliance aims to "enable seamless access to logged-in users across major streaming apps," according to Kelly MacLean, a vice president at Amazon's ad unit who oversees sales tied to its Amazon DSP. Early tests of the technology have shown that advertisers can reach 40% more unique viewers while cutting back the frequency of a specific ad running in front of the same users by nearly 30%. The partnership will make available a pool of 80 million connected-TV households in the U.S., giving rise to "a better experience for marketers, consumers, and programmers that are on our platforms," says Jay Askinasi, Roku’s senior vice president of global media revenue and growth. Analysts are bullish on the deal. Bank of America Global Research raised the firm's price target on Roku to $100 from $85 and affirmed a buy rating after the partnership was unveiled. Citizens JMP analyst Matthew Condon reiterated an outperform rating and $95 price target on Roku shares, saying he was increasingly confident that the company could sustain mid-teens-percent growth in its platform revenue. Loop Capital analyst Alan Gould upgraded Roku to buy from hold with a price target of $100, up from $80, citing expectations that the Amazon advertising partnership should begin boosting Roku's financial results starting next year. The partnership will integrate Roku and Amazon's logged-in connected-TV user bases, representing an estimated 80 million households, through the Amazon demand-side platform. Roku contributes its industry-leading user base while Amazon "brings its unmatched shopping feedback loop," according to Gould. Wedbush analysts also issued a research note, saying that Roku has maintained its favorable positioning as an agnostic platform allowing it to partner with Amazon, Walmart, and many others. "This allows Roku to create partnerships that leverage others’ data, and the exclusivity between Amazon and Roku in their newly announced partnership does not preclude the latter from continuing its partnerships with Walmart, Shopify, Instacart, and others," they said. As Roku enters the early stages of shoppable ads, the San Jose, Calif., provider of a streaming-tech platform is establishing itself as a partner to all, "creating a moat as a CTV platform that will further insulate it from competition in the coming years." In short, this partnership between Roku and Amazon is a match made in streaming heaven for both advertisers and TV watchers alike. With more relevant ads, better frequency management from a consumer perspective, more addressability and measurement on our programmer partners, it's clear that this is a win-win for everyone involved.