No longer content to be just a retail powerhouse, Walmart wants to expand into the advertising business and compete with online rival Amazon. To that end, Walmart is buying smart TV manufacturer VIZIO for $2.3 billion.
Why buy VIZIO? Mainly because VIZIO’s SmartCast Operating System will allow Walmart to connect with consumers using innovative entertainment. (Or should we say it will allow Walmart to advertise more easily.) VIZIO has more than 18 million accounts on SmartCast, which offers free, streamed content that is supported by ads. VIZIO’s advertising business has more than 500 direct advertiser relationships, including a number of Fortune 500 firms.
Today, Walmart does sell ads at its 10,500 physical stores and websites. But once it acquires VIZIO, Walmart will be able to sell ads through streaming services on televisions, similar to how Roku and Amazon operate.
Walmart stores serve 160 million visitors each week; a whopping 90% of all Americans shop at Walmart. And while Walmart’s advertising business generated revenue of $3.4 billion, that amount is less than one percent of its total retail sales. Compare this to Amazon which generates ad sales of about 15% of its total sales and the reason for the acquisition becomes clearer.
By buying VIZIO, Walmart keeps its valuable shopping data and gains operating systems and hardware that are used to deliver ads. It expands Walmart Connect, which brings advertising partners into contact with its extensive customer base through sponsored products ads.
Group Activities and Discussion Questions:
- Discuss the various approaches for promoting products.
- Show Vizio website: https://www.vizio.com/en/home
- Show Walmart Connect website: https://www.walmartconnect.com/
- Divide students into teams. Have each team analyze how Amazon and Walmart use sponsored ads to drive sales.
- In teams, have students develop a promotional plan that uses VIZIO to advertise.
Source: Meyersohn, N. (20 February 2024). Why Walmart is buying Vizio. CNN Business; Peiser, J. & Gregg, A. (20 February 2024). Walmart to buy TV maker Vizio for $2.3 billion to expand advertising. The Washington Post; other news sources
