Jeffrey Greenberg/Universal Images Group via Getty Images
Vizio TVs will be sold at Walmart in Miami in 2023.
new york
CNN
—
Walmart doesn't just want to sell groceries and T-shirts. The company wants to become a media and advertising giant like Amazon.
Walmart announced Tuesday that it will acquire TV maker Vizio for $2.3 billion to strengthen its advertising business and create a stronger rival to Amazon's fast-growing advertising business.
The company believes it can increase revenue by offering brands the opportunity to advertise on Vizio TVs. His SmartCast, Vizio's smart TV operating system, has more than 18 million active accounts. The partnership will give Walmart more ways to serve advertising through Vizio TVs, as well as create exclusive entertainment options for customers using Vizio TVs.
“We also believe this will enable a rapidly expanding and profitable advertising business,” Seth Dallaire, Walmart U.S. chief revenue officer, said in a news release Tuesday.
Streaming competitor Roku noted last week that TV advertisers are spending more on streaming ads as customers continue to cut the cable cord. Roku and Amazon sell advertising space on their various streaming channels and home screens, as well as licensing deals that allow companies to place their brands on certain programming. It also sells space to apps and media channels to promote movies and shows on customers' screens.
Wal-Mart wants to move into the lucrative advertising field to supplement its low-margin retail business. The company believes it can offset Walmart's heavy spending and boost profits by building new revenue streams such as advertising, health care and financial services.
Walmart has been touting its ability to attract customers to advertisers in recent years. With 90% of Americans shopping at Walmart each year and the company's website and stores receiving about 160 million visitors a week, the company is a treasure trove of shopper data.
The company's advertising business reached $3.4 billion last year, but it accounted for less than 1% of total sales.
Other retailers, including Kroger and Target, are also building advertising businesses.
These retailers are chasing Amazon, which has become the third-largest advertising company behind Google and Facebook. Amazon's advertising services business grew 27% last quarter and accounted for about 15% of total sales.
