Walmart-Vizio: Exploding CTV Market
The acquisition of a TV operating system and ad inventory enables Walmart to be a significant player in the high-growth CTV advertising market., which, according to Statista, reached nearly US $26 billion U.S. dollars in 2023, an increase of 13.2 percent compared to 2022, and is forecast to surpass US $42 billion by 2028. As Walmart states in today’s press release, “Advertising revenue from VIZIO’s innovative and customer-centric operating system accounts for the majority of the company’s growth in the last five years.”
Through the Vizio acquisition, Walmart will be able to compete with major streaming players, first among them, its retail rival Amazon, whose ad-supported Prime Video is expected to generate more than US $2 billion of incremental ad revenue; this figure excludes live sports ad revenues, in 2024, according to research firm Omdia. If Walmart wants to build something like an Amazon Prime membership model, the Vizio acquisition provides assets that will help it in that endeavor.
However, many analysts note,.If Walmart wanted to compete with Amazon in streaming and digital advertising, Roku would have been a smarter acquisition target. Roku TVs account for 1 out of every 3 TVs sold in the U.S.; Roku is the most popular streaming player, and The Roku Channel is one of the most extensive free ad-supported streaming services, and Roku is the largest seller of ads on Roku TVs. Of course, Roku would have been a more expensive acquisition target than Vizio, as its price is approximately five times the price of Vizio’s, per Friday’s market capitalization at the stock exchange. (Separately, Roku has an exclusive arrangement with Walmart to sell products fulfilled by the retail giant on Roku devices, which now, with the Walmart-Vizio acquisition, may be changed.)
If Walmart wanted to compete with Amazon in streaming and digital, advertising, Roku would have been a smarter, albeit pricey, acquisition target.
Walmart-Vizio: Full-funnel Vehicle for Advertisers
Amazon’s retail media network, in addition to its DSP (Demand Side platform) and its recently launched Prime Video CTV advertising product, makes the retail behemoth a formidable competitor in the advertising ecosystem.” Amazon works very well as a full-funnel ad vehicle for brands. You can get CTV with live football and sports events, and now with Amazon – Prime video, all the way down to sponsored display conversion ads on Amazon.com”, a major CPG brand marketer tells Portada. She adds that Amazon CTV advertising costs are not as high as those of Netflix or Disney Plus, making the generally high CTV ad rates somewhat palatable to media buyers. Acquiring a smart TV operating system company like Vizio will enable Walmart to offer a full-funnel advertising channel like Amazon.
“Amazon works very well as a full-funnel ad vehicle for brands. You can get CTV with live football and sports events, and now Amazon – Prime video, all the way down to conversion ads on Amazon.com.”
With the Vizio acquisition, Walmart can now “leverage TV viewership data” to market its products across its ecosystems. It can also “offer direct e-commerce sales” on the connected TV platform — a “massive opportunity” as consumers continue cord-cutting — and allows the retailer to “gain additional data on its viewers and customers,” Wedbush analyst Alicia Reese wrote in a client note. Additionally, Walmart will in time, also “offer direct e-commerce sales” on the Vizio connected TV platform.
The DSP Race: A Place on the Top for Walmart?
The Vizio acquisition also increases Walmart’s chances of becoming a top player among U.S. DSPs. A demand-side platform, often called DSP, is a programmatic advertising platform that allows advertisers and media buying agencies to bid for target audiences automatically on display, video, mobile, and search ad inventory. DSPs are one-stop shops for media buying. The largest DSPs are Google’s Display & Video 360, which, because of its YouTube property, does not have a considerable overlap with other DSPs, Amazon’s DSP, and The Trade Desk. In 2021, Walmart Connect, Walmart’s advertising business unit, launched its Demand-Side Platform, Walmart DSP, which was built in partnership with The Trade Desk. The Walmart-Vizio acquisition will feed the Walmart DSP with more smart TV viewership data which will be combined with Walmart’s large trove of shopper first-party data, making it more competitive to grow to become a top 4 DSP in the United States.
