On Thursday, June 16, Roku announced that it has teamed up with retail giant Walmart to launch shoppable ads on the platform. This is Roku's attempt to make its connected TV business an e-commerce shopping hub.
Roku Partners with Walmart
Roku's shoppable ads will allow its customers to use their remote device to choose a product on the screen, go directly to the checkout page, and pay using Roku Pay, which is the company's payments platform.
Once the process is completed, customers will receive an email with the details about the purchase, including the shipping, return and support information.
This is an easier and faster way for customers to buy items they like as they can do it all in one platform instead of going back and forth from Roku to a retail website.
Roku has decided to sign Walmart as its exclusive retailer for this advertisement project.
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In an interview with The Hollywood Reporter, William White, Walmart's chief marketing officer, said that by working with Roku, they've "cracked the code around video shoppability."
White added that they are the first retailer to bring customers to "a new shoppable experience and seamless checkout" through their TV.
The pilot program of the shoppable TV ads is in the works. After announcing their partnership with the retail giant, Roku's shares were up 4%, or $3.35 to $81.93 in after-hours trading.
In his own statement, Peter Hamilton, Roku's head of TV commerce, talked about teaming up with Walmart for the TV ads and said that since streamers have invested in Roku devices and its subscriptions via their Roku remote, this is the perfect time to bring e-commerce into the mix for ease and convenience.
According to Variety, Roku's OneView ad-buying platform will have the exclusive ability to activate and measure shoppable TV ads connected to Walmart.
Changing Terms of Distribution Agreements
The announcement about its teaming up with Walmart came after Roku sent notices to its content partners, informing them that it would change its distribution agreement.
According to Protocol, the changes will be applied to free, ad-supporting streaming channels called FAST channels, which have been a massive growth engine for both TV makers and publishers.
In the notice, Roku told its content partners that it would have to change some of the technology that is powering their channels to its in-house stack and decrease the revenue share by 5%.
This worried the partners because this could also mean that Roku is limiting the access to the data related to channel performance.
FAST channels became popular with streaming audiences because they provide a cable-like experience without the cost.
As the channels garner massive audiences, some industry insiders argue that the streaming platforms have to act more like traditional TV services to match their quality level.
Other industry insiders allege that Roku's latest changes to the distribution agreement are an example of platform providers getting all of the power.
In 2018, Roku began adding free programming to its streaming devices and TVs as part of its efforts to turn the Roku Channel into an ad-supported platform.
The company offered its partners a 60/40 split of the revenue, but under the new terms, Roku now keeps 45% of the net advertising revenues.
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Written by Sophie Webster
