The Wall Street Journal reports that “Walmart is shopping in the TV aisle to help grow its advertising business. The retail giant is in talks to buy smart television-manufacturer Vizio for more than $2 billion, according to people familiar with the situation. The move would give Walmart more places where it can sell ads and pitch shoppers on goods.
“Walmart, including its Sam’s Club chain, has historically been Vizio’s largest customer. Vizio is historically the largest television brand sold at Walmart by sales.”
The Journal offers this analysis:
“The deal talks demonstrate the importance of consumer data and ad space for major retailers as they build out their ad businesses and compete with Amazon. In addition to being an e-commerce behemoth, Amazon is among the biggest ad players in the U.S. behind Google parent Alphabet and Facebook owner Meta Platforms. Amazon has also been building its own smart TV business.
“There is also more competition among retailers hunting for ad dollars with companies including Best Buy, Kroger and Instacart jumping into the business. Advertisers continue to shift dollars into the retail media space, which is expected to hit $59.6 billion in U.S. ad revenue this year, up almost 30% from last year, according to Insider Intelligence.
“Walmart gets most of its U.S. revenue from its grocery business, which typically has low profit margins. Executives see the Walmart Connect ad unit as a path to heftier profits and a way to generate cash beyond the company’s longtime engine of selling goods through stores.”
KC’s View:
It is all about the ads and the alternative revenue streams.
For me, the question is when shoppers will get fed up with it all. Because I’m getting close to that point, and we aren’t even at peak retail media network penetration yet.
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