5 minutes with Strategus’ Joel Cox on the year’s biggest retail deal — Walmart buying VIZIO

Walmart finalized its acquisition of Vizio earlier this month to boost its advertising business, signaling a data-filled future for retail and streaming. The blockbuster deal allows the retail giant to match its shopping transaction data with Vizio’s data on who’s watching what, all with the goal of making ad targeting more precise.

To break down the acquisition, The Current Report turned to a pioneer in connected TV (CTV) advertising. Joel Cox is EVP of Innovation and Strategy at Strategus, a firm whose claim to fame is running the first programmatic CTV campaign. Cox says there’s more to this move than meets the eye, and endemic advertisers stand to benefit.

The following interview has been edited for length and clarity.

Let’s break down this deal: Why do you think Walmart chose to acquire Vizio, and why is it a big deal?

Let me give you the easy answer and then a more thoughtful answer. The easy answer is because they’re trying to keep up with Amazon. Amazon has obviously invested into a very vertically and horizontally integrated tech stack, such that they have nearly a closed loop of data, ad impression, activation and measurement within their own ecosystem.

Walmart, I believe, is aspiring to and making meaningful progress to doing the same. So that’s to say that Walmart is furthering their investment and their commitment into a higher margin — relative to retail — [plus] revenue streams of advertising and monetizing of their data.

So by integrating a television OEM [original equipment manufacturer], it’s also meaningfully connecting what otherwise would have been disparate data sources. So for a marketer like myself and my company, that’s meaningful.

Can you take me into what you’re telling your clients after this Walmart-Vizio deal? How does it change anything business-wise for you? Are you saying, ‘Hey, let’s go plug more money into Walmart’s retail media business?’ Bring me into how that works.

I think anytime you’re able to unify and combine disparate, meaningful data sources, as we would in this case, with Vizio’s ACR [automatic content recognition] data and Walmart’s retail data, you potentially get one of these “one plus one equals three” scenarios where it becomes very compelling and very meaningful.

But I think at the end of the day, those advertisers that want to realize Walmart data today may predominantly be CPG and other sellers within Walmart’s retail and online marketplaces. I can’t help but talk about the fact that this offers the opportunity for advertisers and marketers who are not said CPG and private companies selling in Walmart to nevertheless see value and invest in this data.

Suffice to say that without going too far down this rabbit hole, retail media obviously poses incredible value right off the bat to, hypothetically speaking, Frito Lay and what they’re selling in a Walmart. But what seemingly is not yet fully realized or appreciated by the greater audience in our eyes is the fact that retail media data is inherently, in our eyes, the next iteration of third-party data.

We’re at this really interesting transition or inflection point with the ultimate final demise of third-party cookies. We’re watching as third-party data that is inherently cookie dependent is a black box of taxonomy. We’re at a point now where retail media is in a position of scalability and favorability and performance to replace that.

I believe that retail media data has immense value beyond just the Fortune 500 retailers selling products on Walmart and in Walmart, but also to smaller advertisers, non-retail non-CPG advertisers that nevertheless see value in activating this combo of data. The shopping behaviors and habits combined with your viewing and your television-watching habits to offer something that is much more thoughtful, that is arguably much more scalable, or at a minimum, much more transparent in its taxonomy.

Do you feel like the far-reaching consequences are obvious for people, let’s say marketers, agencies, brands? Do they understand?

I believe that any agency worth their salt is bringing concepts and ideas and new thought to their clients, no doubt about it. And I certainly would place my company in that arena. Nevertheless, at the end of the day, it’s incumbent upon a marketer if they’re going to be data-driven, if they’re going to leverage connected television, the bad news is you’ve got to be willing to roll your sleeves up and dig in.

Connected television is not the field of dreams. You can’t just throw some money into a Hulu deal ID and expect that all of your woes are going to be solved. Running connected television properly is to run it programmatically. Which is to say, you’ve got to have hands-on-keyboard darn near 24/7 to [be] continuously testing, continuously optimizing and continuously iterating your campaign based upon the signal that you’re getting back.

And for Walmart to be visionary enough to want to keep pace with Amazon and to offer what is getting closer to be a closed loop of data to identify the right audience to target the right advertisers, also to measure how they’ve purchased or converted after ad exposure, is incredibly powerful. And that’s obviously where we’re headed.

In 2022, Walmart’s CFO said in the next five years Walmart would be less dependent on its stores because of its growth in advertising. In its latest earnings statement, Walmart reported that about a third of its operating income came from advertising. So what does that say to you that such a huge force in the grocery space is realizing that they’re making such high margins within advertising, and that it’s a gold mine for them?

It tells me that retail and grocery is among the lowest of low-margin businesses, and surviving and scaling on single-digit margins is hard. Granted, single-digit margins on many, many, many billions of dollars is still billions of dollars.

But it also tells us that data-driven advertising is where the proverbial puck is going. It’s meaningful in that it is a massive revenue enhancer. There’s a reason that Walmart and Amazon are investing as much as they are into this tech stack. And what it tells us is if you’re willing to make those types of bets or investments, the juice is worth the squeeze.

And it is to say that programmatic digital advertising, coupled with meaningful proprietary data, is incredibly lucrative and incredibly meaningful.

I mean, we almost refer to this as “the sawdust on the wood shop floor.” And in some ways, it’s surprising that it’s taken this long for some of these organizations to realize the value of that sawdust and to begin to aggregate it and monetize it.

And the sawdust is data.

The sawdust is the data. Absolutely.