Home Digital TV and Video Vizio’s Bet On Advertising And Data Is Paying Off At Last

Vizio’s Bet On Advertising And Data Is Paying Off At Last

SHARE:

Vizio has walked a tricky tightrope since launching its advertising business in late 2019.

It needs its advertising and data business to offset diminishing returns and lower prices on hardware sales.

But after a tough first year on the market, with Vizio down by more than half over the past 12 months, the company is seeing the improvement it needs from the platform side of its house.

Vizio device sales were down 11% in Q2 year-over-year to a total of $298 million, the company told investors on Wednesday. Although Vizio shipped 5% more devices, it did so at a lower average price, said Vizio CFO Adam Townsend.

That seems pretty bad for a company that just make TVs. But it isn’t the end of the world if Vizio can extract more recurring revenue from those smart TV sets.

“To the point of our dual revenue model strategically, we’re willing to be at a low gross profit margin on our TV unit sales, because they’re so valuable once we get those units in homes and generate that recurring revenue stream that comes from [an] ARPU model,” said CEO William Wang.

When Vizio talks about ARPU, it means the average recurring annual revenue for a smart TV device it sells.

Largely due to growth in the ads business, Vizio went from a $14 million loss in Q2 2021 to a $2 million profit this past quarter despite the plunge in hardware revenue. A mere $2 million profit doesn’t make Vizio an ad platform powerhouse – but it’s better than being in the red.

And investors appear pleased, considering Vizio shares jumped roughly 25% overnight.

Advertising revenue rose 71% to $81 million in Q2, and Vizio added more than 200 direct brand clients. Townsend name dropped Georgia-Pacific, HP, Little Caesars, Lowe’s and Nationwide.

This represents an expansion beyond entertainment companies, which are Vizio’s bread and butter, especially with streaming services such as Starz, Discovery and Disney paying to promote their respective streaming apps.

Subscribe

AdExchanger Daily

Get our editors’ roundup delivered to your inbox every weekday.

The net result is that Vizio’s ARPU was up by more than half compared to the same period last year, and now sits at $25.87.

But advertising isn’t the only factor driving up platform revenue.

Data licensing grew 65% YoY to $30 million in Q2 2022. Although the addressable market for data licensing is smaller than advertising, it’s a lucrative business, particularly as smart TV data providers retreat into larger companies.

TV manufacturer LG acquired Alphonso in 2021 and is now the exclusive seller of Alphonso’s ACR data. Roku bought Nielsen’s ACR data business last year and replanted it in its walled garden.

With fewer and fewer options, Vizio’s relatively open data set becomes more important to a broad ecosystem.

“Our data is becoming the cornerstone of the CTV measurement market through some of our licensing partners,” Townsend said, pointing to iSpot, Comscore, VideoAmp, 605, TVSquared and Nielsen. “[They] all rely on our data to fuel their ad currency products.”

Must Read

There’s A Lot Wrong With Google’s And Meta’s Non-Transparent ‘Refund’ Practices

Google and Meta are playing with fire. Their opaque refund practices have already exposed them to customer blowback – and could lead to class-action lawsuits by disgruntled advertisers.

Comic: The Great Online Privacy Battle

How US Intelligence Agencies Buy And Use Programmatic Data For Surveillance

Mike Yeagley, an independent contractor who has scouted and acquired commercial data and technology on behalf of intelligence agencies, is one of the earliest evangelists of using ad tech tracking information to identify and surveil government targets.

Comic: The MFA Cafe

Adalytics Report Torches Ad Tech For Touting MFA Prevention While Scarfing MFA Supply

Practically every ad tech vendor has put out a press release in recent months full of bluster about cutting out made for advertising sites – and yet supply sources remain oversaturated with garbage inventory.

Privacy! Commerce! Connected TV! Read all about it. Subscribe to AdExchanger Newsletters

Cloud-Based Collaboration Is Ad Tech’s Post-Cookie Lifeline – But Will It Last?

Cross-cloud data collaboration technology is the best bet for a post-cookie solution. But it’s vulnerable to similar privacy concerns.

Topsort Raises $20 Million To Seize The Post-Cookie Market Opportunity This Year

Topsort raised $20 million, with plans to seize the 2024 opportunity for post-cookie ad tech.

Comic: "All right folks, it's safe!"

From AI Content To Fake Local News, Brands Must Play Programmatic Dodgeball This Election Season

Programmatic advertising is rife with misinformation. Brands can protect themselves this election season without blocking the news.