December 12, 2019
Television manufacturer Vizio is forming Vizio Ads to sell advertising on its Internet-connected SmartCast TV operating system. To do so, the company plans to hire “about two dozen” ad salespeople across the U.S. next year. Senior vice president Mike O’Donnell, who revealed that six salespeople have already been hired, stated that Vizio Ads will be housed with Vizio’s TV data unit Inscape, both of which reside in the company’s “platform business.” Currently, advertising is sold by companies whose programming streams on SmartCast.
The Wall Street Journal reports that, “Vizio will offer marketers ad inventory such as commercial time on the company’s free streaming service, WatchFree, and display advertising units on SmartCast’s home, search and discovery screens” as well as “some inventory within various ad-supported apps that viewers access via SmartCast.” About 13 million TV sets use SmartCast “and previous operating systems.”
Vizio isn’t the only TV manufacturer pursuing ad sales; Samsung Electronics also sells ads on its smart TVs. Ad-buying company Magna predicts that, “streaming video ad revenue on TV screens in the U.S. is expected to hit $4.4 billion in 2020, up from $3.4 billion last year.” “It’s our largest growth driver,” said Magna senior vice president of strategic investment Molly Finnerty. “Our connected TV and OTT ad spend is starting to come from traditional linear investment as consumption is shifting.”
O’Donnell noted that Vizio is optimistic about selling ads, because “it sells many of the connected TVs itself.” “You don’t have to buy a streaming box or a dongle to plug into your Vizio TV,” he said.
A look at Roku’s business points to the “potential for connected TV ad sellers.” That company, “one of the largest streaming ad sellers in the market, reported $481.2 million in platform revenue through the first nine months of 2019, far surpassing the revenue it makes from selling streaming devices.” A source stated that Vizio’s platform business “has revenue in the mid-eight figures … [which] includes Vizio’s cut of ad and subscription revenue generated by its platform, as well as revenue from Inscape’s data deals.”
O’Donnell noted that ad sales “could improve tight margins for TV sets, which frequently get sold at a discount.” IHS Markit reported that, “Vizio was the second-biggest shipper of TVs in the U.S. during the third quarter of 2019, with a 16.5 percent market share.” In the aftermath of an FTC lawsuit, Vizio “agreed to obtain express consent for collecting [customer] data as part of the settlement.” Vizio explained that 13.2 million users have thus far opted in.