There's an old adage in consumer electronics that the hardware business is a very tough business, with narrow margins and fickle consumers.Why did Walmart decide to invest? billions of dollars Setting out to make and sell TVs faster, better, and/or cheaper than Vizio misses the point of last week's acquisition.
Walmart may slightly improve the Vizio's production and distribution efficiencies, but the TV's future value will be measured not by its original retail price, but by the seven years it spends at the heart of today's modern connected home. It will be.
The obvious rationale for the Vizio acquisition is TV and video advertising. And as advertising takes center stage, its value is tied directly to the underlying data that supports it. Data is not just the new oil for marketers. It's also the oxygen that brings new branding and performance opportunities to life in TV advertising.
Proven data strategy
America's largest retailer has been an early adopter of using the type of data Vizio provides for many years.
Many agencies and brands already rely on Vizio's data, and it's licensed by virtually every company vying for supremacy in the TV audience currency. But you only need to look to the past to get a glimpse of how Walmart will apply Vizio's TV dataset to accelerate its advertising business.
In the '90s, Walmart's shopping data became a key component of Nielsen's grocery tracking business, with the retailer licensing its data for both tracking and analysis. As the value of this data and other unique insights grows, Walmart recognizes that it can create more value (and therefore revenue) by using its data internally and working directly with manufacturers, and licensing The contract has ended.
The company is also known for analyzing data to determine which products experienced the greatest increase in sales velocity during natural disasters. winner? A delicious snack everyone loves, Pop-Tarts are a long-shelf-life product that can be eaten chilled. More than that, Walmart continually uses that data to develop in-store pricing and promotional strategies, improve store inventory formats, identify categories for private label products, and more. And now, There are more opportunities than ever before with Vizio viewing data.
Now it looks like history is about to repeat itself again.
Walmart's Vizio goal is to meet every marketer's demand for deterministic attribution at scale. In other words, link household-level impression data to transaction data in a fully closed-loop model.
Those who believe that Walmart will continue to act as a data broker and license Vizio to widely view its statistics are missing the point. Walmart generates more than $1 billion in retail sales every day. Vizio's total data transactions are just in the low nine figures.
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Walmart wants more access to the more than $300 billion digital advertising market. Bringing Vizio data into his Walmart garden allows for massive advertising growth that far exceeds data licensing opportunities.
To put this into context, the overall advertising opportunity for Walmart is so large that the company's CFO recently said: [our] Future profitability is more likely to come from selling advertising at Walmart facilities than from selling household goods. ”
Drive innovation and growth
Walmart's goals may be similar to Amazon's efforts to expand its advertising business through Prime Video.
Jeff Bezos said in 2016 that winning the Golden Globe was valuable because it helped accelerate Amazon's flywheel and deepen its ties to the retail side by “helping us sell more shoes.” Stated. Similarly, the deal with Vizio is aimed at moving deeper into consumer engagement in the home, ultimately strengthening Walmart's retail division and opening up new revenue streams in advertising. Masu. And once that flywheel gets going, it's proven to lead to success.
In the short term, TV ratings companies will compete for access to the shrinking pool of available viewership data. For measurement companies, a more restricted data market will help players that are or are focusing on proprietary first-party data, including companies such as Nielsen, TVision and disruptor Telly. You might even be able to make a claim. Their data business may be just as important as their data business. That advertising business.
Ultimately, Walmart's acquisition of Vizio serves as powerful validation that the broader TV and video advertising market is poised to spark a new wave of data-driven growth and much-needed innovation. Function.
“on TV or video” is a column that explores the opportunities and challenges in advanced television and video.
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