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Roku will add a fat stack of ad tech to its streaming platform under a deal to buy Nielsen’s Advanced Video Advertising business, putting Roku in position to offer a fully addressable advertising solution for TV programmers.

Under the agreement, announced Monday, Roku will obtain Nielsen’s video automatic content recognition (ACR) technology and dynamic ad insertion (DAI) system, which can replace ads in linear feeds with targeted, household-level spots on over-the-top streaming platforms. In addition, Nielsen and Roku are entering into a multiyear pact under which data from Roku’s platform will be incorporated into the forthcoming Nielsen One cross-media measurement solution.

For Nielsen, the deal marks its exit from the video ad-tech business. The Roku pact “demonstrates Nielsen’s laser focus on measurement,” said Scott Brown, Nielsen’s GM of audience measurement.

Financial terms of the deal weren’t disclosed. The sale of Nielsen’s AVA business to Roku is expected to close in the second quarter of 2021, subject to customary closing conditions.

The combo of Nielsen’s video ad technology with Roku’s platform and broad reach — it tallied 51.2 million active accounts at the end of 2020 — will let Roku deliver the benefits of streaming advertising to traditional TV networks, said Louqman Parampath, the company’s VP of product management for advertising.

“Roku will bring the promise of DAI to the market for the first time ever at scale,” Parampath said.

Nielsen’s Advanced Video Advertising group had struck deals for addressable advertising tests with TV programmers including Disney, CBS, Discovery, Fox, NBCUniversal, WarnerMedia, A+E Networks and AMC Networks. After the deal closes, Parampath said, Roku plans to have “renewed conversations” with those media partners as well as other smart TV makers about working with Roku to enable addressable ads.

In addition, Roku’s base of smart TVs and other devices will be pulled into the Nielsen One proposed cross-media currency spanning streaming and traditional TV, augmenting the company’s existing deals for data from DirecTV, Dish and Vizio smart TVs. All told, Nielsen One will draw on nearly 100 million  devices with the addition of Roku. Nielsen’s Brown commented, “As Roku brings the power of dynamic ad insertion to all forms of TV, we’re excited to help monetize the addressable market by measuring smart TV as a currency.”

Under the companies’ long-term commercial agreement, Roku will implement support for Nielsen Total Ad Ratings (TAR) measurement on its platform. Specifically, Roku’s OneView media sales and ad-buying platform will natively integrate Nielsen Digital Ad Ratings (DAR) for advertisers. Roku also will let content partners add support for Nielsen Digital Content Ratings (DCR). Roku launched OneView after acquiring demand-side platform provider Dataxu in October 2019.

When the deal closes, Roku will bring on the approximately 100 Nielsen AVA employees — including GM Kelly Abcarian — and assume ownership of Nielsen’s portfolio of ACR and DAI patents. Roku TV models already include support for Nielsen ACR and will add digital-ad insertion capabilities in “the near future,” the company said.

U.S. spending on addressable TV advertising — still just a fraction of the total TV ad market — is expected to reach $3.6 billion by 2022, up 75% from August 2020, according to recent estimates by research firm eMarketer. And through the deal with Nielsen, Roku is angling to get a bigger piece of that pie.

Nielsen formed the Advanced Video Advertising group in February 2019, after acquiring addressable TV technology company Sorenson Media for $11.25 million in a bankruptcy-court proceeding. Nielsen obtained the ACR tech through its 2017 acquisition of metadata provider Gracenote, and acquired Qterics, a smart TV software and privacy management vendor.

Nielsen’s deal to sell AVA comes after the company in November 2020 sold the Nielsen Global Connect retail-sales measurement business (now called NielsenIQ) to private-equity firm Advent International for $2.7 billion.