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Smart TV manufacturer Vizio is investing in ad tech to continue the sale even after the TV is turned on.
In the shift to streaming TV, a platform that only sells hardware can only make it so far.
Vizio started making Smart TVs in 2014, and hardware still makes up most of its revenue – but not its profits.
Its Platform+ division started selling inventory in 2019 when it launched Vizio Ads. Vizio also sells its ACR data, which is used by CTV measurement companies building alternate currencies.
Though Platform+ pulled in only 17% of Vizio’s revenue in Q3 last year, it raked in about 70% of the profits.
Its course is mirroring Roku, another TV company that started out in hardware but now makes most of its money in ads.
But selling TV inventory isn’t what Vizio claims as its secret sauce – it’s the ACR data behind those sales. Vizio started selling ACR data when it bought Inscape (previously Cognitive Media Networks) in 2015.
“First party data has always been critical in [addressable] advertising,” said Mike O’Donnell, chief revenue officer of Vizio’s platform business.
ACR also improves advertisers’ incremental reach, or the ability to target streaming viewers whom they couldn’t reach with a linear campaign, O’Donnell added.
O’Donnell spoke with AdExchanger.
AdExchanger: What’s going to be the role of ACR in the future of TV advertising?
O’DONNELL: First-party data has always been critical in every digital landscape – desktop, mobile, you name it – and CTV is following suit. Attaching viewership habits to advertising will allow us to build more effective CTV campaigns for advertisers.
We’ve gotten a lot of support over the past two years from agency holdcos, including $100 million in upfront commitments last year, because we’ve committed to integrating our data into better addressable solutions for their brands. We’re definitely expecting the addressable marketplace around first-party data to keep accelerating.
Is the TV landscape going to see more walled gardens?
There are always going to be walled gardens in the marketplace, especially as more scale comes in.
Our data and ability to capture what’s on TV is unique in creating a good viewing environment both for consumers and for advertising purposes. The shift to streaming isn’t going to slow down, so there’s a lot of value in working with measurement partners to fuel the networks looking to make that transition.
What makes Vizio’s approach to ACR data unique?
We were the first in the marketplace to enable this. There’s a technological component to it – we use fingerprinting technology. We’ve been in this space since 2015, when we bought Cognitive Media Networks and turned it into Inscape.
So when we talk about this with partners, we have a history. We’ve been out in the market licensing and working with measurement partners since then, and we’ve gained a lot of experience on how best to make that technology accessible and easy to use.
How is ACR data collected and used?
100% opt-in. The new Vizio television is very clear about what it’s capturing and how that consumer data is being used during the onboarding experience.
Vizio’s home screen has ad and editorial units that recommend content to consumers based on what they’re already watching according to our ACR data. It gives consumers a more relevant, curated viewing experience – and it also creates great business opportunities by enabling a more targeted advertising solution.
How is Inscape’s ACR data informing alternate currency providers like VideoAmp or Comscore?
Our data enables them to understand what’s happening on the [TV] at the household level, [with] a holistic view of what’s going on both in linear and streaming environments.
Can media buyers buy Vizio programmatically?
When we first launched the business, we had no direct sales team until we built out Vizio Ads over the past two years. A majority of our inventory is direct sales. But we’re only two years into this – we’re building out our sales team to create better advertising solutions for agencies and their brands and more managed executions (e.g., programmatic buying).
What are your plans to grow ad revenue?
We’re growing our ad revenue streams. We sell inventory on our own WatchFree+ service in addition to other ad-supported apps on our platform.
We also sell search and discovery units on our home screen – which is attracting more media partners and sponsorships as the streaming wars continue heating up. There’s a lot of investment coming in to capture attention.
Advertising exposure on our home screen is a really valuable piece of real estate for us – it’s your last chance to engage a viewer before they get lost in an app or a show.
But we’ve actually started reducing the number of partners we have in our data marketplace in order to put our focus on measurement and our measurement partners. We have licensed data to help create new currencies and bolster the existing ones. We also have what we call Household Connect, which uses ACR to [retarget] across screens based on a viewer’s habits.
What are Vizio’s plans to increase scale?
Since launching SmartCast, we now have 14.4 million 30-day active users. We’ve seen 65% growth year-over-year, so we expect to stay a top Smart TV provider and acquire even more active users.
We also partnered with Verizon six months ago to boost our Household Connect product. Verizon has one of the largest device graphs in the marketplace. Marrying that [device graph] with our TV viewership data is going to create a powerful off-device advertising solution for agencies and brands.
This interview has been edited and condensed.
This article has been updated.
