Roku Wraps Largest Upfront Ever, Surpassing $1 Billion in Ad Commitments

Roku is taking a bigger piece of the upfront pie as the line between linear and streaming continues to erode. Last year, the connected TV company closed its upfront negotiations a full quarter earlier than usual. In 2022, Roku crossed the upfront finish line ahead of other CTV platforms and surpassed $1 billion in spending commitments for the first time ever, the company announced Thursday afternoon in a letter to shareholders as part of its quarterly earnings. As was also the case in 2021, Roku closed deals with all seven major holding companies, all of which were able to make buying decisions without having to wait until wrapping all of their deals with the biggest media companies, continuing the shift to TV streaming from previous upfront marketplaces. “We were really pleased with [negotiations], especially our ability to close them as quickly as we did alongside the major TV networks,” Alison Levin, vp of ad sales and strategy, told reporters ahead of the company’s earnings call. “We're really pleased with the overall commitment that we're seeing from our advertisers, and it really is a testament to how they feel about Roku’s future and the investments they want to make on our platform.” Roku Reveals New Shoppable Ad Experience, More Originals at NewFronts First-time advertisers on Roku made up 25% of all upfront commitments, and the platform saw 100% client retention in key categories including auto, telecom and travel. Levin declined to provide any details about pricing or CPM (cost per thousand viewers reached) during this year’s upfront. During the company’s NewFronts presentation in May, Roku highlighted The Roku Channel, the Roku Brand Studio and its advertising platform OneView as major benefits for advertisers. And they listened. This year, Roku saw upfront marketer investment across Roku Originals, the Roku Brand Studio, OneView and more. Roku finished its talks ahead of one upfront week presenter, Warner Bros. Discovery, which hasn't yet publicly finished its negotiations. Other major media networks—including The CW, NBCUniversal, Fox, Disney, TelevisaUnivision and Paramount—have already crossed the finish line. A ‘significant slowdown’ Despite the company’s record upfront, Roku told investors it experienced a “significant slowdown” in TV advertising spend, which it attributed to the macroeconomic environment and caused pressure on platform revenue growth. Roku withdrew its full-year revenue growth rate estimate and expects net revenue to increase 3% year over year in the third quarter. The company missed its expectations for the second quarter, posting revenue of $764 million (up 18%) but a significant gap from the predicted 25% year over year increase to $805 million in the second quarter. “In Q2, advertisers started to pull back spend, and where they do that is the scatter market,” CFO Steve Louden said. “Upfronts are really a look at the future, and so what I would say is we had a record upfront. We’re very happy with it. At the same time, you can have short-term disruption in the advertising market due to the macroeconomic issues of the economy.” The company does still expect that advertising spend, particularly in the scatter market, will be negatively impacted in the second half of the year, with Louden stating the severity of the pullback in the scatter market was “not expected.” “Marketers did unexpectedly reduce scatter spend due to fears of recession, but even in verticals that were the most affected, like CPG and auto, their spend declined on traditional TV and they still increased by double digits on our platform,” added Levin. User base is still growing Roku added 1.8 million monthly active users to the platform last quarter to reach 63.1 million users, an 18% year-over-year increase. That’s up from the 1.1 million new monthly active users it reported last quarter but still down from the 3.7 million it gained to close out 2021. But while Roku added users, the connected TV platform saw streaming hours decline by 200 million, falling to 20.7 billion. The company did see further success with its AVOD streamer The Roku Channel, which remained a top five channel on the platform in terms of active account reach and streaming hour engagement. In June, the company premiered the second season of Chrissy’s Court, which became its top-rated unscripted Roku Originals launch by reach and delivered four times the unique views of the first season premiere. Coming up in November is the premiere of the Weird Al Yankovic biopic, which Roku said is already attracting advertiser attention.