What Walmart’s acquisition of Vizio could mean for the retailer’s ad business

When rumors that Walmart might acquire TV purveyor Vizio began circulating online in February, one predominant question was: why? The retailer already has an expansive retail media network, not to mention its own line of TVs (called Onn) and a preexisting partnership with Vizio competitor Roku.

Late last month, the rumor was proven true: Walmart is buying the company for approximately $2.3 billion. Marketing Brew turned to a few streaming analysts to get their takes on what the acquisition could mean for Walmart’s ad business and the CTV space as a whole.

Stake your claim

The retail giant could stand to benefit in a number of ways from its Vizio acquisition. For one, Walmart may be able to compete even more with other lower-priced TV sets by allowing “Walmart to prioritize [Vizio’s] products,” according to a report from research firm MoffettNathanson.

Beyond the devices themselves, Vizio brings with it a plethora of existing advertiser relationships that Walmart could potentially benefit from. The TV manufacturer grew its direct advertising partnerships by 32% year over year in the most recent quarter, inking deals with 117 net new partners, Vizio reported in its Q4 2023 earnings. It also has content partnerships to supply its WatchFree+ streamer, including agreements with Magnolia Pictures, Paramount, and BBC Studios.

To grow its ad business, Walmart will likely look to leverage Vizio’s SmartCast and grow its user base, Dan Rayburn, conference chairman of the Streaming Summit at NAB Show, told Marketing Brew. (SmartCast is Vizio’s CTV operating system that recommends content to users based on their personal viewing habits.)

That could mean an uphill challenge: both Vizio’s user growth rate and TV shipping numbers have decreased or remained flat in recent years. Currently, Vizio SmartCast has 18.5 million active accounts, the company reported in its Q4 2023 earnings release.

Ads sold through Walmart’s retail media network could stand to become more lucrative through the Vizio acquisition, Jeremy Goldman, senior director of marketing, commerce, and tech briefings at Insider Intelligence, said. Walmart can identify products that may appeal to individual consumers based on their Walmart purchase history, and can market by region as well.

“There are a lot of these SmartCast accounts that Vizio has,” Goldman said. “That connected data tied to a user profile can be very beneficial in having highly targeted advertising…and the more targeted advertising is, the more you generally charge for it.”

There are other potential benefits. Walmart+, the company’s subscription service that gives members benefits like free delivery, already has a partnership with Paramount+ through which Walmart+ users get access to Paramount+ for free. In theory, the retailer could promote Paramount+ more through Vizio’s TVs, Goldman said.

And Vizio’s reach could benefit Walmart’s growing retail media network, which extends across Walmart’s digital and IRL footprints, along with an in-store radio network. Walmart Connect, the retailer’s media business, began rolling out new in-store ads last year, such as through QR codes placed on shopping carts.

Level the playing field?

While Walmart could benefit from the Vizio acquisition, it could also spell trouble for the other players in the CTV space. For one, Walmart may stand to become more competitive with Amazon, which has its own extensive ad network and a considerable streaming and CTV footprint, including with Prime Video ads, a proprietary Fire TV line, and Fire TV Stick.

Walmart gaining new purchase in the CTV space could also complicate things for Roku, which inked a deal with Walmart in 2022 on shoppable ads. In the first nine months of 2023, 40% of Roku’s device revenues appear to have come from Walmart, according to a report from MoffettNathanson.

“Recently, we believe that there is a strong and growing body of evidence that supports the view that Roku is at the precipice of being squeezed by the emergence of challengers on all flanks,” MoffettNathanson wrote.

Rayburn said that the acquisition could also spell the end of access to broken-out ad revenue data from SmartCast users that Vizio reports every quarter. “No other company in the market does that,” he said.

Losing that information would mean “losing the only data point we have in the market when it comes to FAST services, so [that’s] not good for the industry overall,” he said. “It’s possible that when those revenues are rolled up into Walmart’s advertising revenue, they might break them out. But my guess is Walmart probably won’t do that.”