Analyzing Walmart-Vizio, plus Ad Fontes goes pre-bid

The big news this week was the announcement of Walmart’s $2.5 billion offer to acquire TV manufacturer Vizio. This feels to me like we might be under-hyping the impact in the coming years. Read my take below.

Vendor interview: Ad Fontes Media

Lou Paskalis has been in the news lately, mainly for defending the very concept of news. As Chief Strategy Officer of Ad Fontes Media he’s on a mission to bring advertising back to news sites.

Ad Fontes is best known for its “Media Bias Chart”, shown below. In this week’s interview we learn how this data is collected using a combination of AI and adversarial human raters. And we learn how this data is now being made available in The Trade Desk.

Watch the interview with Ari, free for a week before going behind the paywall.

Podcast: Commerce Media with Michael Cassidy

Michael Cassidy is the CEO of M3, a commerce media company that specializes in bringing non-endemic advertising to retailers. Think travel ads on suitcase commerce, or hot sauce ads on pizza sites.

We discuss commerce, the origins of Undertone, embarrassing stories about Eric Franchi, The Trade Desk earnings, and more.

Listen to the pod now:

• Spotify

• Apple

• Anywhere you listen

Walmart-Vizio Run Down

In what might be the biggest “ad tech” deal of the decade, Walmart is buying TV manufacturer Vizio for $2.3 billion. Let’s break it down.

Ad Tech deal?

You heard me. This deal is all about expanding the capabilities and reach of Walmart Connect, the second largest commerce media platform after Amazon.

Scale — how big is it? Brian Wieser had this to say last Spring:

Say Walmart Connect is on a $3.5 billion run rate. Vizio is about $450 million in ad revenue ($325.9 over last 3Qs), so combined we’re at $4 billion and growing fast. Some comparisons to give scale: $TTD revenue is about $2 billion, DoubleVerify is about $550 million, AppLovin is $3.3 billion, and Snap is $4.6 billion.

In terms of reach, Walmart is about 6-7% of all retail sales in the US. Vizio’s reach is about 22 million households opted-in to data collection, which translates to approximately 18% of the US.

Attribution on aisle 3

The first thing many people think about this deal is the opportunity for ad targeting. But maybe the real opportunity is in ad attribution.

Vizio ACR data has been made available to third parties for attribution under the brand InScape. This data allows advertisers and their vendors to draw inferences between the advertisements a household was exposed to and their subsequent purchasing behavior. Bridging this viewership data to actions is more of an art than a science since a household TV doesn’t match 1-1 with the data that might identify a buyer. The TV data might be keyed by IP address, while the consumer might purchase on a phone while using cellular data. And while a TV represents a household, the individuals within that household may be difficult to identify without third-party graphs or additional manipulation.

Walmart, as owner of Vizio, can bring 1-1 matching between the TV set and the loyalty card or credit card of the consumer, without any intermediate “hops”. This could be done by matching credit cards, email addresses, or by explicitly asking the consumer to provide their Walmart loyalty card for extra discounts.

On the other end of the purchasing equation Walmart has SKU-level purchasing data on a large portion of all retail in the United States, both online and offline, and has commercial relationships with virtually every consumer-facing product company.

It’s also worth pointing out how much more powerful Walmart+Vizio is versus FireTV+Whole Foods (Amazon). Some bullet points you can use to sound smart:

• FireTV doesn’t have nearly the reach of Vizio, yet.

• Amazon doesn’t have access to ACR data outside of the Fire programming, Vizio has access to everything on the “glass”

• Whole Foods doesn’t carry nearly the number of SKUs as Walmart

• Whole Foods SKUs are not mainstream CPG brands that advertise on TV

• Whole Foods locations are not representative of the US population as a whole

Don’t discount discounting

Vizio’s business model has always relied on the Platform+ business (mostly advertising) to subsidize their value proposition to consumers. In their S1 from 2021 they state:

As a stand-alone public company Vizio used advertising to bolster gross margin in the face of price conscious TV buyers. But as a part of Walmart, that subsidy could instead be used to expand market share, with the profits being kept by Walmart Connect instead. The key question is whether Walmart thinks of Vizio TVs primarily as a panel for the purposes of collecting data for advertising (in which case having absolute market share is not vital), or as a distribution channel for advertising, in which case every household matters.

Programming and targeting

While attribution is incredibly exciting, let’s not forget targeting. As stated above, independent Vizio is closing in on a half billion in ad revenue, and is only executing on their own devices and on limited sections of those devices. Walmart, on the other hand, is operating a trading desk at scale with The Trade Desk. One could imagine going to advertisers with offers that span Vizio and non-Vizio buys, all powered by a unified data set.

Catching strays

What happened to Comcast? Back in 2020 the WSJ reported that the Comcast was partnering with Walmart to build and distribute TVs. Nothing seems to have come of this.

What happens to Roku? Walmart has a partnership with Roku to sell smart TVs under the Walmart brand Onn. Uhh oh. Roku stock fell almost 7% on the announcement after having cratered the previous week on poor guidance. If not for the anti-merger mania in DC you would think Roku would be a great addition to one of the big tech companies, but who knows.

In the category of “stuff only a former DSP executive knows”, the Yahoo DSP a couple years back got an exclusive to use Vizio data for pre-bid targeting. This is a very powerful offering since there are limited sources of this kinds of data and (I believe?) SambaTV is tied up with TTD and Alphonso is owned by LG. So not too many options out there. If Vizio pulls data from Yahoo, that’s not great for them.

Is this deal good for The Trade Desk or no? If Walmart continues their DSP partnership then probably yes. Keep an eye on this…

And what about everyone else? And by that I mean the many companies that license Vizio Inscape data for attribution and measurement? This covers all the companies currently competing to replace Nielsen, along with all the “performance TV” companies that service advertisers. Vizio isn’t the only source of data, but it is a big one.

See also: Ad Tech Explained does its own run down of the deal.

Reading list

What we talked about on the pod and other stuff you should read:

• Walmart to acquire Vizio

• The Trade Desk’s earnings transcript

• AppLovin’s amazing earnings

• Ad Fontes media makes their journalism ratings available in The Trade Desk for targeting

• Buzzfeed sells Complex

• The NY Times is working on some kind of contextual AI tool, which seems very vague

• Ad tech veterans John Heller (Freewheel), and Michael Rubenstein (Appnexus) come out of stealth with Firsthand, an AI tool for publishers.

• Google’s Gemini has an embarrassing fumble as human image generation has overly diverse outcomes. Also see Ari’s funny tweet.

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