Does Netflix need it's own Vizio? Does everyone?
The TV ad market is suddenly shifting to walled gardens like Amazon and Walmart
I’m still trying to process Walmart’s $2.3 billion acquisition of Vizio, and what it means for the future of the ad industry. Specifically, I’m wondering - will we see a number of counter-moves in this space aimed at matching Walmart’s newfound set of advantages?
Does everybody in TV suddenly need a way to connect the dots between ads and transactions within an operating system they own?
And what does that mean for the biggest player in streaming - Netflix - a company that has just recently decided it wants to become a dominant ad player?
I had the always outspoken Kelly Metz, Chief Investment Officer at OMD, on my podcast this week. We recorded this just before the Vizio deal was announced.
I asked Kelly about Amazon’s recent move to switch its default offering for Prime Video to an ad-supported one, how much ad inventory that will quickly create, and how Amazon can use its natural ecommerce-dominant advantage to track the impact of ads on its platform.
“If you look at what Amazon is doing just within their own environment, they’re looking at brand and truly connected commerce,” said Metz. “How do you connect brand all the way to performance all on one platform, all with one partner?”
“That’s going to put a lot of pressure on everyone else to do the same,” she added presciently. “Everyone’s got to up their game…You need more than Amazon to be successful in this world.”
Like I said, right after we spoke, Walmart upped its game with its Vizio deal.
So is it game on for a TV manufacturer buying spree? Not necessarily. So and so buying Toshiba won’t immediately mean that they could match Walmart and Amazon’s retail media prowess.
As my Marketecture colleague Ari Parparo put it, “the first thing many people think about this deal is the opportunity for ad targeting. But maybe the real opportunity is in ad attribution.”
To be sure, there are limits to what Walmart can do with Vizio. Yes, the company can sell ads within Vizio’s FAST channels which allow people to shop via Walmart QR codes, for example. Yet that audience is growing, but small (it doesn’t show up in Nielsen’s streaming reports).
Also, thanks to Vizio’s ACR data, Walmart can theoretically connect the dots from TV ad campaigns that run on Vizio TVs to shopping on its own site. But to be sure, owning Vizio doesn’t suddenly mean that Walmart controls any and all inventory on Vizio sets and can make them all shoppable. Not even close.
Still, when you suddenly have two very scaled players in Amazon and Walmart that combine retail media with TV advertising, not to mention their own crucial marketing cloud products, everyone in TV has to feel on notice.
Even Netflix?
Why pick on them Mike? Don’t Paramount and NBCU and the CW and everyone else have to figure this stuff out? Yes, but Netflix is thee streaming giant - one that is also a tech company at heart (just ask them).
Right now, is Netflix building an ad delivery system designed to recapture the past - i.e. big zeitgeisty TV culture moments - or the future - i.e. data science, AI driven advertising? Is that a crazy question?
To be fair, brands still need the former. Metz noted the recent industry excitement this year surrounding the massive, crossover audience that was the Super Bowl, and how marketers have renewed interest in recapturing such moments
“We have to remember why marketing is successful,” she said. “It’s because you actually have a brand core that resonates with your core audience and then emanates out into culture,” she said “Brands are constantly balancing brand and demand.”
Netflix would seem to nail the culture part. Just be getting into advertising, “it renewed interest from advertisers in television quite honestly,” said Metz. “You had seen advertisers pull spend. They renewed interest in this channel.”
And maybe bringing brands into big moments like the next season of “Wednesday” is a fine enough business. But I would think Reed and Ted and the gang would want more, given that Netflix makes more money from ad-supported subs. Still, what’s Netflix’s move here? What’s anyone’s?
I could see Roku becoming an attractive target - maybe for Target?? Would we see a big TV player launch its own commerce vehicle? Should someone buy Pinterest?
Very few media companies can compete with retailers on retail. Yet the pressure to prove that your advertising is delivering outcomes is only going to mount.
“Sometimes you really shouldn’t be spending on a high CPM medium if it’s not going to drive some sort of near term performance,” said Metz.
BTW, in case you missed it, here’s my live podcast episode with Kochava CEO Charles Manning recorded at the company’s summit last week: