The movement toward widespread “shoppable ads” continues with this week’s expansion of Roku’s partnership with Instacart as Roku chases what it describes as “high-intent customers.” As QR code ads have gradually gained acceptance, the industry has been waiting for more sophisticated interactivity that could ease the customer conversion process and ultimately enable platforms to get a piece of product sales rather than just take a fee for the ad placement. These kinds of arrangements could obviously enable limitless new revenue streams for platforms, although not all will include commissions: some might simply pay higher CPMs based on the level of interactivity with the ad, with no distinction between the clicking and the buying. Other arrangements could be a hybrid of both. No matter how these deals evolve, addressable technology supercharged by connected TV platforms has kicked open the door, and it’s clear that big advertising beneficiaries like Alphabet’s Google are salivating over the possibilities. In the case of Roku, the Instacart partnership focuses on consumer-packaged goods, with new capabilities through Instacart including a direct path to purchase via text messaging or QR code that means people could get the product within an hour of seeing the ad through Instacart delivery. In addition, consumers can purchase items directly through Instacart via ads on Roku’s home screen, with advertisers now able to precisely target users based on their past purchase behavior. Instacart VP Tim Castelli described the expanded partnership as “making every ad not just an impression but a direct pathway to purchase” as Roku SVP Jay Askinasi said CPG advertisers can now achieve the “massive scale and full-funnel solutions” they have sought for years.
Next? While the industry is still crawling out of the QR code era and only now testing more sophisticated shoppability, this week’s Roku-Instacart deal offers another example of what the future holds. Recall that Walmart is expected to close on its Vizio purchase next month, at which time it will no doubt start testing and eventually ramping up shoppable ads that can drive retail sales and help justify the deal’s $2.3 billion price tag. Big streamers seeking to supplement those ad tiers with commission-based revenue can see where this is all going. And so can big advertisers and retailers, which seem intrigued but understandably cautious as platforms use their significant customer data as a carrot to extract better affiliate deals from brands. In the past, products could set an advertising budget and then reap the predictable profit margins that came from increased sales. As shoppable ads become more prevalent, they’ll have to factor in those commissions and weigh them against the potential of higher sales activity that comes from the interactivity itself. Expect a delicate dance between these parties as they work out standard practices. But it feels like there are too many mutual benefits for either side to ignore.
