Walmart’s $2.3bn Vizio buyout will help retailer compete against Amazon & Roku in CTV

Through the arrangement, Vizio’s connected television (CTV) advertising platform will be integrated with Walmart Connect, the retailer’s media business. The move is likely to provide a significant boost to Walmart’s advertising business.

The development comes at a good time for Walmart, which saw its global advertising business spike 33% during its fiscal fourth quarter – the results of which were filed this morning. Year-over-year, the company’s ads business grew 28%, reaching $3.4bn.

Walmart said the deal will “create new opportunities to help advertisers connect with customers, empowering brands with differentiated and compelling opportunities to engage at scale and to realize greater impact from their advertising spend with Walmart.”

Vizio has around 500 direct advertising relationships, which account for a majority of its gross profit. But that’s not the only element of the deal likely to improve Walmart’s advertising posture. The acquisition also includes Vizio’s SmartCast operating system, which Walmart says will enable the company to “serve its customers in new ways, including innovative television and in-home entertainment and media experiences.”

Currently used by over 18m active accounts, SmartCast is an especially valuable element of the deal. As Ken Suh, the chief strategy officer of video and CTV platform Nexxen, puts it: “It’s the operating system that is key because it is in the home and collects the ACR [automatic content recognition] data that tells you not only what people are watching but also what they do on their TV. For example, it’s not just that I watch the Super Bowl; it’s that I actually play casual games on my TV.”

These kinds of insights will help Walmart compete more readily against other connected TV makers, such as Roku and Amazon. “This ACR data provides very powerful targeting capabilities, which Amazon doesn’t have at Vizio’s scale, for Walmart Connect to actually start to compete with some of the other companies out there,” says Suh. “Walmart can essentially give the Vizio TVs away for really low prices to gain the distribution network of data for powering its ACR data.”

The acquisition is a smart move in the eyes of many media industry players. “By diversifying offsite inventory, Walmart could open opportunities to leverage its customer data via Walmart Connect to reach potential purchasers in Vizio OS,” says Amy Rumpler, senior vice-president of search and social media services at adtech software firm Basis Technologies.

“The opposite connection is also interesting,” she notes. “Any viewership information Walmart captures through Vizio could help it better understand consumers and improve targeting inside its other owned and operated properties. An example would be a Walmart shopper who maybe has, or hasn’t yet, searched for ‘work wear’ onsite or in-app but is a regular watcher of Yellowstone receiving Walmart Shopping ads on their Vizio device – and in their Walmart app.”

The deal, Rumpler says, looks almost like an “extension” of Walmart’s previous deal with CTV advertising and measurement platform Innovid, which served personalized ads using dynamic creative optimization to Walmart shoppers on their smart TVs.

The expansion of inventory is likely to be a welcomed development for CTV marketers. Nearly 50% of marketers are frustrated by a lack of retail media inventory, with 57% saying they’d like to see more CTV and video streaming inventory available from retailers, according to research from LiveIntent last year.

Plus, the deal, in some ways, insulates Walmart’s media business from the signal loss and targeting and measurement challenges that many retail media networks will face amid ongoing third-party cookie deprecation. By establishing a closed-off environment via Vizio where users are already logged in, Walmart will be able to easily link engagement data with sales – without tracking users across different apps or devices.

News of the acquisition came as Walmart reported its fiscal fourth quarter results, which largely beat analysts’ expectations. Global sales growth rose nearly 5% during the quarter and Walmart US sales, in particular, were up 3.4%. In the US, Walmart’s core business raked in $68bn in revenue during the quarter and Sam’s Club contributed an additional $10bn.

The company’s e-commerce business, too, continues to boom. Walmart recorded a 23% lift in global e-commerce sales growth for the quarter. These sales were responsible for 18% of net sales globally during the period.

Walmart’s acquisition of Vizio is likely to further strengthen its e-commerce business.

“This acquisition mirrors strategies employed by industry leaders such as Amazon, particularly in leveraging synergies between video advertising and e-commerce platforms,” says Hunter Terry, head of CTV at customer data management platform Lotame. “While Walmart is currently navigating its path in the competitive landscapes of both e-commerce and streaming, securing Vizio propels it ahead, establishing a formidable position against other CTV entities.”

Having already broken into the streaming and CTV markets with the help of previous partnerships with Innovid and Roku, Walmart will only grow more formidable in the space now, says Terry. “The acquisition of Vizio catapults Walmart directly into the realm of immediate scale and influence in the CTV market.”

Early this morning, Walmart stock jumped 5.2% to $179.29 after news of the acquisition broke. The increase represents the stock’s largest percent increase since November 2022. Shares of Roku, meanwhile, dipped close to 7% at the beginning of the trading day on Wall Street today.