What Vizio can do for Walmart's digital advertising business

Walmart (WMT) announced a $2.3 billion deal to buy TV manufacturer Vizio (VZIO) as the company moves to bolster its digital advertising and media business. In an interview with Yahoo Finance, Walmart CFO John David Rainey spoke on the deal, saying "It allows us to use their operating system ... to provide a new channel to actually provide better service to our customers and connect to them with data."

DoubleVerify (DV) CEO Mark Zagorski joins Yahoo Finance to discuss the deal and how it can be used to boost Walmart's media business and stand out against competition.

Zagorski comments on risks in the deal and what the deal can accomplish for Walmart: "The risk always is, there's other assets there that have to deal with Vizio as a set manufacturer. I don't think Vizio makes a lot of money off the actual devices themselves. Where they're making money off of is data. You're going to have to carry that device business to get the data out of it... If you look at linear TV ad spend, it's declining every year, connected TV ad spend is only growing, and combining that with the retail data that they're getting from their online transactions, their store transactions, putting that together with the CTV business, CTV data business, it's a powerful combo."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

JULIE HYMAN: For those of us who watch TV on TV still, you know, how does Walmart collect that information and that ad revenue based on that deal?

MARK ZAGORSKI: Yeah. It's-- first off, great being here again, Julie. This is a really, really interesting acquisition for Walmart, because I think it combines two of the hottest trends in advertising today-- retail media networks, which is expected to be $140 billion advertising business worldwide this year, and connected television, right, CTV, which is a $30 billion US business.

What they're getting here? Forget about the TV sets, forget about devices and Vizio. What they're getting is data. And what that data is going to allow them to do is fuel that advertising business that you just mentioned, which grew over 20% last year. And that data is essential. When you can take a retail media network, combine it with the data that you can get from television viewing and CTV viewing, you've got a powerful combination.

Amazon has seen that this year. And I think what they're doing is really responding to Amazon's launch of prime advertising, because Prime advertising is going to be a great CTV media application, combined with a great data application that they have in their retail media business.

JOHS LIPTON: And, Mark, so it sounds like generally speaking, you think this was a smart strategic move by Walmart. I'm just wondering, what you think the kind of downside risk would be for an acquisition like this?

MARK ZAGORSKI: You know, the risk always is there's other assets there that you have to deal with Vizio. It's a set manufacturer. I don't think Vizio makes a lot of money off the actual devices themselves. Where they're making money off of is data. So you're going to have to carry that device business to get the data out of it.

That being said, I think it's a small price to pay for a significant amount of CTV advertising opportunity. That, again, that's where the dollars are going. I mean, if you look at linear TV ad spend, it's declining every year. Connected TV ad spend is only growing. And combining that with the retail data that they're getting from their online transactions, their store transactions, putting that together with the CTV business, CTV data business, it's a powerful combo.

JULIE HYMAN: So if you're an advertiser, are-- which of these is more attractive, if you're looking at the Amazon offering or the Walmart offering where most advertisers are going to just flood the zone and do both?

MARK ZAGORSKI: I think there's room for both. The one aspect that's, obviously, a little bit different here is Walmart has physical store data as well. So you're not just looking at online transactions, but the ability to capture physical store data and location-based data with CTV viewership as well. So it adds another perspective, which I think, you know, if you're in the business of location-based selling and actual retail selling, it's pretty powerful.

JOHS LIPTON: And, Mark, I want to get your take on a broader question, too, just to get to a pulse check from you mark on the online ad market. Just kind of what you're seeing right now mark and how you see evolving over 2024, we just heard from Meta and Alphabet, I would think, Mark, it would be a pretty strong year just given, listen, you've got the Olympics, you've got the election. But what are you seeing?

MARK ZAGORSKI: Yeah. I think it's certainly-- you know, we've come into this year in a little bit better position as an industry than we did last year. I think some of the ambiguity around interest rates has been cleaned up. The concerns about recession, not that they're gone totally, but they look a bit better, I think, has given all advertisers a bit more looseness with what their spend is going to be. Now no one's throwing a party right now. But if you look at general ad estimates from the big agency groups, they're all looking for a better year this year than we had last year.

JOHS LIPTON: Mark, always great to have you on the show. Thanks so much for joining us. Appreciate it.

MARK ZAGORSKI: Absolutely. Thanks for having