Vizio’s Strategy to Dominate the Smart TV OS Market

Audience planning matters, right? Yeah. Reach frequency, it still matters. There's a lot of brands that for a long time...

They still want to start there. And for a long time, a lot of brands have been built on television and audience and reaching frequency. But I think the way we look at it now is audience is an important input, right? But outcomes are kind of a scoreboard.

Sure. What we want to do is we want to be able to deliver an experience for our customers that starts up at the top of the funnel. CTV is known to deliver reach and frequency and audiences, but how do we work them through that purchase path? This week on Next in Media, I wrapped up my Next in TV series with my partners at Vizio as I sat down and came with Mike O'Donnell, Vizio's chief revenue officer slash strategic growth officer, to talk about how things have gone since the Walmart has fully integrated with Vizio as the company is trying to balance classic TV metrics with retail media expectations.

Mike and I also talked about Vizio's expanding ambitions for its operating system and where you see shoppable TV advertising headed. Let's get started. Hi, everybody. Welcome to Next in Media.

Here we're live on the ground in Cannes. This is the culmination of my Next in TV series with my friends at Vizio. I got Michael Donald here. You're the chief revenue and strategic growth officer.

Is that right, Mike? Yes. Thanks for being here. The last time you were on the show, it's funny, it's not that long ago, but things have changed.

I think we were just talking about smart TVs as an ad vehicle. Now you guys are part of Walmart. The integration has gone through. Like kind of catch me up on how that's gone, the overall vision.

Yeah. Well, first, thanks for having me back on. Yeah. And congrats on all the success.

You're a rare second appearance. Yeah, repeat appearance. You know, I would say things have changed since the last time we spoke. Last time we spoke, Vizio was a smart TV company with a growing platform.

Today, we are a scaled platform that sits inside one of the largest commerce ecosystems in the world. So I would say our ambitions have changed pretty dramatically since the last time I was here. That said, what hasn't really changed for us as an operating system is our focus on the customer experience. That's so critical.

When people buy a Vizio or an on-television with the Vizio operating system, they come to us and they want to be able to find whatever they want to watch as fast and as easy as possible. So for us, it's really about making sure we continue to focus on making that as easy as possible. We have fast performance, easy to use user interface, all the content available that they want to watch. Because when we have that that gives us the position in the living room to be able to combine ourselves with the scale the retail marketing experience and the understanding of how people shop that Walmart has Right So it leads to kind of the vision of make TV simpler and audiences more measurable So one of the things that's evolved and changed a lot of the, like the smart TV has had emerged really as almost like a portal, like people sending people on to places they want to get to.

But now increasingly the programming is distinctive. Your UI is becoming distinctive. How is that kind of how is that kind of when the brand becomes something that people care about how does it change things for visio i mean for us we've seen we've seen this evolution right where the operating system was you know a passive experience yeah and it shifted more to search and discovery and you used to think of the tv operating system when we launched it really as like plumbing right it was invisible it was invisible but it was important yeah right but Today we see like 50% of all of the customers that purchase television are streaming first, right?

Two-thirds of the time spent on our platform, or more than two-thirds, is spent streaming within the operating system environment. So we have moved to that, you know, everyone makes the statement like streaming is here. Yeah, streaming based on the data is truly here, right? So what's important for us is that we continue to focus on that discovery aspect.

We need to make it as easy as possible for the customers to use. And when we do that, that opens up a significant amount of possibilities for us to build campaigns for our advertisers that start at the top of the funnel and then work closely within our new environment to be able to drive them to the bottom of the funnel and the outcomes and the purchases. So given all that you're talking about and the opportunity, you know, like it's obviously that share is going to become increasingly important.

But it almost has felt like there's been a stalemate in the OS wars. Like now you got Fox coming out and grabbing Roku. What can change that for you guys? Like how does that shift?

I mean, look, there's a lot of large platforms, a lot of large companies, a lot of smart people in this business. So it's hard to say this is going to be at a stalemate. Yeah. Right.

It's going to be very, very competitive. and we expect it to be that way, but the math is changing. I mean, we see the math changing. So for us, scale is critically important.

Distribution matters. We're going to finish Q1 as the largest OS in the market or the most sold televisions in first quarter carried the Vizio operating system. So that's really important to us. I think we announced publicly we're going to sell about 25% to 30% of all televisions in the U.

S. this year. It's pretty solid. With the Vizio operating system.

But I think scale is just one piece of it. Talk about the customer experience, but in order to have an operating system that gives you the opportunity to win in the long run you can just have scale Right You have to have scale plus engagement And so for us we need to continue to invest and find ways to invest in growing that engagement And what we're really excited about is the fact that not only is our scale increasing, but the engagement on our platform continues to increase.

So I think right now we've got 30 minutes per day on average is spent searching and discovering on our home screen. That makes that a really important piece of real estate. That's the front door in the living room. Our WatchFree Plus app is the number three overall used app on our platform.

Right. A battle for attention. It's significant. I think that helps us justify to our consumers that we're doing the right thing for them.

And when we're doing the right thing for them, ultimately that leads to a better brand experience for our advertising customers. So as CTV advertising has really taken off the last couple of years, a lot more players, it's fragmented. Everyone's excited about the targeting possibilities, but I wonder if you think people are spending a little bit too much time on the talking about audience and segments and not as much about outcomes when the whole rest of the business is so focused on that.

I think audience planning matters, right? Yeah. Reach frequency, it still matters. There's a lot of brands that for a long time.

They still want to start there. And for a long time, a lot of brands have been built on television and audience and reach and frequency. But I think the way we look at it now is audience is an important input, right? But outcomes are kind of a scoreboard.

And what we want to do is we want to be able to deliver an experience for our customers that starts up at the top of the funnel. CTV is known to deliver reach and frequency and audiences. But how do we work them through that purchase path, right? How do we work them down the funnel and be able to show them on the back end, hey, they saw this and they ultimately purchased this.

And I think audience alone is really about what did the audience see as opposed to what did they actually, what steps or outcomes did they take in the back end after they saw it? Did they search for it? Did they ultimately buy? Those are the things that advertisers really want to understand now.

And I know there's all kinds of outcomes and you're talking about connecting a lot of different dots here. What about this idea of the living room being a storefront and content to commerce? It's something you talk about. What role does Walmart Connect play there?

I mean, I think you can't take that too literal in the sense that we're not looking to build an environment or experience for our customers where they're going to interrupt family movie night to go buy laundry detergent right there. What we think about is how do we help our advertising partners understand that journey from seeing something on the television that could be seeing a home screen ad clicking on a qr code right searching for the product maybe ultimately buying it how do we help our advertising partners navigate that experience and really the way we do it the smart way to do it we think is to be able to understand all the signals that are delivered to us along the way.

And that only not helps lead to better outcomes for them, but also helps us optimize the campaign throughout to deliver those better outcomes. Speaking of that, you guys talked about this year, New Front, a few months ago, that the industry has long been sort of fixated on the last click and the idea that maybe TV should not just become all about that. We don't want to head there. How do you find that balance?

What's behind that sentiment? I mean, TV for a long time has been a significant reach vehicle. And when it's a significant reach vehicle, it's because the customer sitting there, they're not thinking, sitting in their living room like, hey, I want to buy this product. And we don't want to interrupt the middle of their content.

And their viewing experience is going to want to buy that product. What we want to do is we want to help them understand through what could be a brand experience, right, in that moment of search and discovery, something that might be available to them that they could want to purchase later. And I think our ability to work closely with all the tools and resources around Walmart to be able to showcase to our customers that path to purchase, all those signals that they're going to find along the way, that path to purchase and that journey they're taking, ultimately can lead them to the last click.

But it's not the end-all, be-all metric. Right. Right. There's a lot of different aspects of the purchase funnel that they need to go through.

And we can be a solution for them across the way, across all those aspects of it. Lastly, Mike, we're here at camp. We all just woke up today to this news that Walmart's buying Vibe. I know it just happened.

Is there anything you can share with us at this point? I would say the deal hasn't closed yet. Yeah. So can't share too much.

What I can say is I think that what's important for us is that we continue to bring more and more new advertisers into the fold. Yeah. And, you know, Walmart has, Walmart Connect has a robust marketplace business. A lot of new advertisers.

how do we make it simpler and easier for them to bring them into the connected TV space? That's a huge opportunity to expand the TV. Huge opportunity. And for us, we want to be able to bring connected television to as many advertisers as possible.

All right. Awesome stuff, Mike. Thanks so much for being here. Absolutely.

Thank you, Mike. Thank you. Thanks again to my guests this week, Vizio's Mike O'Donnell and my partners at Vizio. If you liked this week's episode, please take a moment to rate and leave a review.

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