Walmart's $2.3 Billion Vizio Acquisition: Redefining Retail Advertising

Last week, Walmart made waves with its announcement of a $2.3 billion acquisition of Vizio, including its SmartCast Operating System. This strategic move is set to reshape the retail giant's advertising reach, intensifying the ongoing battle with Amazon for supremacy in displaying ads within streaming content.

The Vizio acquisition aligns seamlessly with Walmart's aggressive efforts to fortify its advertising business. In its Q4 earnings statement, the company reported a remarkable 28% growth, reaching $3.4 billion over the past year.

Entering the Ecosystem: Walmart vs. Amazon

Walmart's acquisition of Vizio marks a strategic entry into Amazon and Best Buy's ecosystem of users, strategically enhancing Walmart's inventory supply and boosting e-commerce sales. The move has been hailed as a game-changer, expanding Walmart's influence in the highly competitive world of retail advertising.

David Zapletal, COO at Digital Remedy, commented on the significance of the deal, stating, "Walmart has entered Amazon and Best Buy's ecosystem through the purchase of Vizio — a strategic move that will increase Walmart's inventory supply and boost e-commerce sales for the company."

The Power of SmartCast: A New Advertising Frontier

Vizio, renowned for its smart televisions and sound bars, brings to the table its SmartCast system. This system provides users with access to third-party streaming apps like Disney+ and Hulu, akin to a software version of Amazon's FireStick. Ads can be seamlessly displayed through the operating system, and valuable customer insights can be gleaned through its automatic content recognition (ACR) systems.

Kenneth Suh, Chief Strategy Officer of the ad tech platform Nexxen, highlighted the power of ACR data, stating, "This ACR data provides very powerful targeting capabilities — which Amazon doesn't have at Vizio's scale — for Walmart Connect to compete with some of the other companies out there."

Advertising in Homes: Walmart's Strategic Embedment

The acquisition strategically positions Walmart to embed itself directly into consumers' homes through advertisements, offering an unprecedented opportunity to reach new customers and gain profound insights into their media consumption habits. This deeper integration is anticipated to drive growth in commerce sales for Walmart.

While Walmart's ad business is still a fraction of Amazon's, the acquisition significantly decreases the cost of ad campaigns by presenting them through the newly owned platform, reducing the reliance on third-party spaces.

Future Outlook: A Top Player in CTV Advertising?

Experts predict that Walmart's consumer reach, combined with Vizio's ad business, could rival industry leaders like Samsung and Roku. If successful, Walmart-Vizio might ascend to become a top five Connected TV (CTV) ad seller in the US and potentially globally.

Despite Amazon's formidable lead in ad services, Walmart's strong performance in day-to-day grocery sales and higher revenue in certain quarters positions it as a formidable competitor.

Conclusion: The Intersection of Retail and Entertainment

The pending regulatory approval of the Vizio acquisition presents Walmart with a significant opportunity to capitalize on the trend of targeted ads, potentially widening the revenue gap between the retail giants. With 18 million active user accounts on Vizio's platform, Walmart is poised to place targeted ads directly in front of millions, redefining the intersection of retail and entertainment.