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As the TV industry heads into a new year of massive changes brought on by the rapid growth of the FASTS (Free Ad-Supported Streaming TV Services) and the Flixes (all those multi-billion dollar Netflix competitors), ad executives are looking for new ways to reach elusive CTV consumers. That’s why they’re turning to device manufacturers whose home screens are where those viewers begin their journeys and thus have the ability to use that data to serve up better targeted, more relevant advertising.
It’s why we’ve seen Roku’s stock soar, and why VIZIO, which has America’s second largest device footprint, is jumping into the advertising business. Last year they launched Project OAR, which brought together TV networks, ad agencies and other media companies in order to create standards for addressable (targeted) advertising on linear television.
And now they’ve launched their own direct sales ad business.
I caught up with Mike O'Donnell who is leading the charge for VIZIO at CES to get the inside story.
MikeODonnell, Senior Vice President at VIZIO
Alan Wolk (AW): Tell me why VIZIO is getting into the ad game. What is the goal here?
Mike O’Donnell (MO): The high level goal of the ad business is to round out VIZIO’s offerings. We’ve got content offerings via apps that live on our SmartCast operating system, including our popular WatchFree app. We’ve got a well-respected data product with Inscape. And while we’ve been monetizing some of our inventory via SSPs [Sell Side Platforms], we want to have more control over the advertising as it would allow us to create a better experience for advertisers and ultimately for consumers, which has always been our goal.
AW: So what are your immediate plans for the ad business?
MO: My immediate goal is to get the business off to a strong start. That means increasing the number of content partners we have on the platform, increasing our opportunities to monetize those partners by building out a strategy that looks at both the display units on our home screen and targeted video ads. And to do that, we are looking to build a direct ad sales team for OTT/CTV advertising.
AW: So you’re really pioneers in the space
MO: Yes and no. Yes, we’re the first TV OEM to go at this full blast, but at the same time, we’re following the monetization strategies that have been laid out by other players in the space who have stood up platform businesses that have multiple methods of monetization.
The way we look at it, VIZIO accounts for one out of every five TVs sold in the US and that makes us a key part of the ecosystem. We see this space continuing to grow significantly, and as it grows, there is going to be room for everyone to succeed. But if you’re an advertiser and you’re looking to shift some of that $70 billion dollars out of traditional TV, you need to have solutions that offer you scale. We can help the OTT/CTV market offer even more scale than they have now.
AW: What is your pitch to advertisers, why advertise with VIZIO?
MO: What we’re basically saying is hey, look, if you're buying ads on other platforms, that’s great, but you're missing the 20% of the market that has VIZIO SmartCast televisions. We can help you fill in that missing piece.
If you want to continue to spend in this marketplace to drive incremental reach, leverage data and have addressable type solutions within the CTV and OTT space, we have the ability to help you do that.
VIZIO has always been a very innovative company, there is a whole culture of innovation here. And that stems directly from our CEO and founder, William Wang, who introduced the first affordable smart TV and who pushed us to emphasize our content offering and our interface, so that users don’t need to buy another device.
AW: How does data factor into all this?
MO: We’ve got an incredible data partner in Inscape. In many ways we did things the opposite way from most of our competitors: we actually built our data offering first and then introduced the ad business. And with Inscape, we have 13+ million opted-in households, which allows us to provide advertisers with the sort of rich multilevel data they’re seeking.
We want to make it simple. If you just want to find incremental audiences tied to reach and frequency, we've got that. We've got data that can tell you what VIZIO audiences are watching. We can tell you what they aren't watching too, so you can easily target the people you missed in order to drive incremental reach. We can also provide digital type solutions. And by that I mean, our data gives advertisers the ability to reach very specific audiences. So if you need to buy against say “dog owners in Minneapolis,” we've got solutions that can deliver that specific audience to you.
AW: And how have advertisers been responding?
MO: When you're thinking from the lens of an advertiser, what we’re really bringing to the marketplace is that 20 percent of the audience that is available through the second largest TV manufacturer in the US. So we’ve got scale. And we’ve got premium inventory. So if you want to have contextually relevant advertising, we have solutions for that. And if you want to have a data driven or addressable solution, we've got the data backbone to deliver that. We’re not looking to reinvent the wheel and advertisers appreciate that—the process of buying OTT and CTV is complex enough as it is.
AW: Who are some of the partners you are working with?
MO: Our key partners on the SmartCast platform include the services people expect like Netflix, Amazon, Apple and Hulu. Pluto helps power WatchFree, our free, ad supported linear service with over 150 channels. We also work with a number of AVOD or hybrid AVOD/SVOD apps like Xumo, Tubi, Newsy, Filmrise, and Crackle. We’ve been taking a curated approach to our app partnerships and so we’re going to continue to seek out new app partners based on viewer demand.
AW: So we talked about advertisers, but what’s in this for consumers? Is there any reason for them to care?
MO: Well, first and foremost, we are a TV manufacturer. And what selling advertising does is provides revenue that allows us to keep the cost of TVs down. So while VIZIO is already one of the best priced brands in the market, we can use the ad revenue to subsidize innovations and new features.
On a more macro level, we know that more and more consumers are moving to streaming, so we want to make sure we have all the right content available for them, both from a subscription standpoint, and from a free ad supported standpoint. As cord cutting grows, we know that most of our customers are going to be looking to us to supply them with free ad-supported content. So our goal here is to be able to give that to them by making our platform very attractive for those sorts of apps. It’s good for them, it’s good for us, and ultimately, it’s good for our customers.
