Making Money with Your Roku Channel
So you finally took the plunge into Connected Television and launched your own Roku channel — or you’re about to launch one —and now all you need to do is figure out how the heck you’re going to make money with it.
Enter Video Advertising Networks (VANs).
A video advertising network streams advertisements — in the form of TV commercials — to your Roku channel. You, in turn, place these ads at beginning (preroll), middle (midroll) and/or end (postroll) of your video content and are paid for every ad that streams. We call this monetization. Got 100 viewers? You get paid for 100 ads. Got 10,000 viewers? You get paid for 10,000 ads. And if your viewers watch more than one video, and see more than one ad, well, it only goes up from there… in theory, anyway.
The problem with most video ad networks is they are based on a model in which they bid-for advertising inventory, so they tend to have limited advertisements available that they, in turn, must stream across multiple channels. (You’re not the only channel on the block.) These ad networks use services like Google’s DoubleClick, where advertisers “sell” ad inventory to the lowest bidders, who in turn, stream those ads to their channel partners (you). They bid one price, pay you another, and keep the difference, or spread. While this system works great for them, it’s far from perfect for you and your channel.
The main problem with these ad networks is they never have enough ad inventory to fill all the ad requests from all channels. In most cases, they can only fill, on average 40–50% of them. This is called fill rate.
To illustrate, let’s say you have set your channel up to stream one ad at the beginning of every video on your channel. A viewer comes to the channel, selects a video, and your channel calls the ad network for an ad. Only forty to fifty percent of the time (on average) the ad network will have an ad to fill that spot. The other fifty- to sixty percent of the time, no ad is shown. (Can you say, “lost opportunity?”)
In a perfect world, all ad calls would be filled with an ad, but it just doesn’t happen that way with most ad networks. Average fill rates across the major video ad networks average 40–50%. That means out of every 10 ad calls, only 4 or 5 get filled.
These advertising networks may advertise high CPM’s (cost per thousand, or what YOU get paid for every 1,000 ads) but if they’re only filling 40–50% of your ads, you’re only really making 40–50% of that CPM. Bottom line, all those unfilled ads are costing YOU money.
To combat this, many channels will setup what we in the industry call a “waterfall,” using two separate ad networks, and weighting them so one gets called first, and if they have no ad to fill, the second one gets called. The problem here is most of these ad networks all source from the same available inventory. So you’re still not guaranteed 100% fill rate.
Enter AdNexxt.
AdNexxt is a video advertising service that offers 100% fill rate — well, actually we advertise 99.9% fill rate, but close enough. AdNexxt doesn’t source its ad inventory from the same places as the other ad networks. Instead, it generates its own. Therefore, there are ALWAYS ads available, and ALL ad calls get filled.
AdNexxt is a great standalone streaming ad solution for your Roku channel OR it can be used in addition to any or all of the other ad networks. Rather than all your eggs in one ad network basket, you can set up multiple ad streams, generating revenue from each ad network. AdNexxt works great as the primary or as the back-up in your waterfall of other ad networks.
AdNexxt is available to both public and private Roku channels. Most ad networks only work with public channels, and some are particular about the number of viewers you’re getting. Those networks may not even approve your channel as a client until you’ve reached a certain level of viewership. AdNexxt, on the other hand, welcomes all channels.
AdNexxt pays more than the other ad networks, too, and it does so in TWO ways. First, because your ads are filled nearly 100% of the time, you earn money on EVERY ad break, not just 40% or 50% of them. Second, it tiers its CPM payments from $5 to $15 per thousand. That works out to 1/2 of 1 cent to 1.5 cents per ad view. The other ad networks tend to pay anywhere from 1/2 to 1 cent, with most channels, newer ones especially, closer to the 1/2 cent mark.
Just like the other ad networks, the more ad views you generate, the higher your payout. They may require 500,000 ad views a month to increase you from 1/2 cent to 1 cent per ad view, but if they’re only filling 40–50% of your ad breaks, you’ll really need to generate 1 million to 1.2 million ad breaks just to make that mark! With AdNexxt, the higher fill rate means your channel gets to the higher CPMs faster.
Whether you have just launched a new Roku channel, or are about to, you’re taking a big step in building your connected television empire. The next step is to effectively monetize it. I urge you to explore all of the streaming ad options available to you. Utilize as many as you can, and make AdNexxt one of them!
You can learn more about AdNexxt at www.adnexxt.com
Phil Autelitano is founder/CEO of both AdNexxt and Mediarazzi, a leading developer of connected television channels and applications for Roku, Amazon Fire TV, Apple TV and other platforms. He can be reached at phil@mediarazzi.com
@PhilAutelitano
