Vizio, a leading smart TV manufacturer, saw its stocks soar by 25% on Tuesday after news broke that Walmart was in talks to purchase the company for a reported $2 billion.
If the deal goes through, this move would not only solidify Walmart’s position in the market but also help the retail giant expand its nascent advertising business. Walmart has recognized that advertising is a significant driver of profitability in today’s digital age.
Both Walmart and Vizio declined to provide official comments on the matter, leaving investors eagerly awaiting further developments.
Interestingly, while Walmart’s stocks dipped by 0.7% at Tuesday’s close, Vizio experienced a substantial surge before the closing bell, illustrating market optimism regarding the potential acquisition.
In recent times, retailers like Walmart have been actively investing in their in-house advertising capabilities, known as retail media networks or RMNs. These RMNs enable brands to advertise both in-store and on retailers’ websites and apps. What makes these networks so appealing is that they are controlled by the retailers themselves, granting brands direct access to data that helps them track the success of their advertisements in driving purchases.
As Walmart continues to pursue avenues of growth and innovation, the potential acquisition of Vizio aligns perfectly with their strategic objectives. Both companies are well-positioned to capitalize on the evolving advertising landscape and maximize profits in an increasingly digital world.
The Appeal of Starting an Advertising Business
For retailers, the prospect of venturing into the advertising industry is highly enticing due to the potential for impressive margins. Analysts estimate that these margins can reach as high as 80%. This opportunity is particularly alluring for players in the grocery segment, where profit margins are usually quite slim.
According to Jefferies, Walmart’s advertising business has the potential to generate sales of $10.3 billion by 2029. Moreover, the income generated from advertisements could reach an impressive $6.7 billion.
Unlocking Data Potential with Vizio
Vizio, renowned for its production of Smart TVs, collects a wealth of user data that it can then sell to advertisers and marketing companies. Acquiring Vizio would grant Walmart invaluable access to this data, significantly enhancing the appeal of its Retail Media Network (RMN) to potential advertisers.
In addition to data advantages, TV operators like Vizio also engage in their own advertising business by selling ad spaces on various platforms such as home screens, free streaming channels, and apps. By acquiring Vizio, Walmart could seamlessly integrate these on-screen advertising avenues into its existing advertising offerings.
Expanding In-Store Advertising Opportunities
Apart from leveraging Vizio’s data capabilities, another avenue for Walmart would be to utilize Vizio’s technology to develop more in-store advertising opportunities across its expansive network of brick-and-mortar stores, totaling over 10,000 locations. While the concept of running ads on digital screens in stores is still in its early stages, it has the potential to become a lucrative innovation for retailers.
In summary, the allure of starting an advertising business for retailers lies in the promising profit margins it offers. Walmart recognizes this potential and believes that an acquisition of Vizio could provide access to valuable user data while also expanding their advertising offerings across various platforms and in-store locations.
The Power of In-Store Retail Media Spending
As a professional in the world of copywriting, I firmly believe in the untapped potential of in-store retail media spending. Matthew O’Grady, the President of Dunnhumby—a data analytics company specializing in assisting grocers and retailers—shares this sentiment, affirming its significance.
In today’s ever-evolving market landscape, it is crucial for businesses to recognize the value of in-store retail media spending. By strategically investing in this area, retailers have the opportunity to unlock impressive results and foster enhanced growth.
At Dunnhumby, we understand the unique needs and challenges faced by grocers and retailers. Through our data analytics expertise, we provide invaluable insights that empower businesses to make informed decisions. By harnessing the power of in-store retail media spending, retailers can establish a strong presence and drive impactful results.
