E-commerce leader Amazon.com and streaming video platform Roku on Monday announced a partnership in internet television advertising. Roku stock jumped on the news.
The arrangement will give advertisers access to the largest authenticated connected TV footprint in the U.S. through Amazon DSP, a demand-side platform for buying online ads.
With the Amazon-Roku alliance, ad buyers will be able to reach about 80 million households, or about 80% of U.S. connected TV households, according to a news release.
The partnership improves addressability across major streaming apps including The Roku Channel, Amazon Prime Video, and other streaming services on Roku and Amazon Fire TV operating systems. Third-party streaming services available through the ad alliance include those from Disney, Fox, Paramount and Warner Bros. Discovery.
Early tests of the Amazon-Roku advertising integration have shown significant benefits, the companies said. Advertisers using the new solution reached 40% more unique viewers with the same budget and reduced how often the same person saw an ad by nearly 30%.
"Our exclusive partnership with Roku is a giant leap for advertisers, bringing best-in-class planning, audience precision, and performance to TV advertising," Paul Kotas, senior vice president for Amazon Ads, said in a statement.
Roku Stock Pops On News
Roku is a major stock in investor Cathie Wood's ARK Innovation ETF .
On the stock market today, Roku stock surged 10.4% to close at 82.17. Earlier in the session, it climbed as much as 13.4% to 84.36. Meanwhile, Amazon stock climbed 1.9% to 216.10.
"We see the collaboration as positive for Roku," Guggenheim analyst Michael Morris said in a client note. He rates Roku stock as buy with a price target of 100.
The "partnership between Amazon and Roku contradicts a bear case that Amazon's growth will be at Roku's expense," Morris said. "Roku now has established partnerships with the four largest DSPs, three of which (Amazon, Alphabet and The Trade Desk) are considered competitors in some facets as the CTV marketplace continues to develop."
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