A Streaming TV Prizefight: Walmart Tries Muscling in on Amazon

The first-ever television commercial ran on July 1, 1941, during a Brooklyn Dodgers-Philadelphia Phillies baseball game airing on the local New York TV station WNBT. The 10-second spot, for Bulova Watches, featured a graphic of a Bulova watch face over a map of the U.S. A voiceover declared that “America runs on Bulova time.”

As it happens, many giant American companies leveraged TV’s ubiquity, reach and impact to become the behemoths they are now. That includes Walmart, the retailer, which in 1980 (shortly after it began running TV ads) posted revenue of $1.2 billion (about $4.5 billion when adjusted for inflation). The company expanded dramatically, helped along by the reach provided by TV. Walmart’s revenue in 2023 was $611 billion.

Television didn’t invent advertising — it had been present in newspapers, magazines and radio for years — but the medium was responsible for turbocharging the industry, and during linear TV’s heyday of the 1980s and 1990s, it accounted for well more than half of all ad spending, according to data from the legendary ad forecaster Robert J. Coen.

But times have changed, and linear TV now finds itself on a precipice. And Walmart now wants to compete with the medium that helped it become a household name. The retail giant’s $2.3 billion deal to buy TV maker Vizio underscores what GroupM analysts call a “new world order, where large advertisers and agencies make up a minority of revenue for some of their largest partners.”

Digital advertising, led by Google and Meta, now makes up a majority of U.S. ad spending. And retail giants want their own piece of the pie, with Amazon pursuing a range of strategies (including turning on ads for Prime Video) to grow its ad business, which topped $34 billion in 2023.

Target has an advertising division (it’s called Roundel) and Walmart’s Walmart Connect marketing division is targeting $6 billion in revenue by 2026, hoping to leverage Vizio’s smart TV OS and its treasure trove of data to bolster its business.

But it also puts traditional TV advertising executives in a tight spot. Yes, streaming video is growing — and so is live sports, seemingly the last piece of monoculture in the U.S. — but linear TV’s decline is only hastening, and the competition from tech and retail giants threatens to siphon even more budgets away from TV offerings into other platforms.

Multiple sources note another element of the Vizio deal that could impact TV companies: Vizio’s automated content recognition (ACR) data, which tracks viewership of content and ads on Vizio TVs, has been widely adopted by the industry. If Walmart stops selling that data to others, it could further hinder the ability to measure viewership in streaming TV, or lead advertisers to cut more deals with Walmart to secure access. (Walmart did not respond for comment.)

“For an advertiser today, I think the complexity of trying to stitch together multiple walled gardens and the open web into a cohesive marketing strategy, it’s a challenge, but you have to work with your own independent data, your own independent methodology and construct the best possible view across all your options,” says Ashwin Navin, the CEO of the TV data and measurement firm Samba TV. “And, you know, that’s the marketing puzzle that everyone has to figure out in the business.”

Navin says that since the Walmart deal was announced, he had already heard from a studio executive inquiring about his company’s data solutions. “Being the only independent TV data company, I think this has been a really important outcome for Samba as well,” Navin adds.

There are other potential beneficiaries, most notably Roku. Needham analyst Laura Martin wrote Feb. 21 that if Vizio’s data is taken out of the market, Roku’s data becomes more valuable.

Already there are signs that linear TV advertising may be in a permanent decline. While advertising revenue has returned to double-digit annual growth at tech companies like Google, Meta and Amazon, ad revenues at traditional TV companies are down, with NBCUniversal and Disney reporting declines in ad revenue at their TV networks, offset to a degree by gains in streaming. At Fox, advertising was down 20 percent compared to a year ago, though it noted the FIFA World Cup in the year-ago quarter skewed that number. At Warner Bros. Discovery, advertising was down 14 percent in its fourth quarter, though CFO Gunnar Weidenfels indicated on the earnings call that they were hopeful for a turnaround as upfront deals kicked in.

But analysts aren’t nearly as rosy. “We believe advertisers have permanently left legacy platforms, including national TV,” S&P Global’s Naveen Sarma wrote in a Jan. 3 report.

“The overall medium faces long-term growth challenges primarily because the large advertisers who dominate TV need to shift spending away from TV to fund additional digital spending, and this shift is not offset by growth in spending from newer advertisers,” noted Madison and Wall principal Brian Wieser in his 2024 outlook.

And while companies like Disney and Paramount have streaming offerings with growing ad businesses, they also have to compete with the likes of YouTube, which booked more than $31 billion in ad revenues in 2023, and Amazon, which is continuing to bolster its Prime Video service. That’s not to mention TikTok, which, as everyone knows, has been surging in viewership.

“There’s competition for eyeballs as well, as these big tech companies are coming in and stealing viewership away and attracting people to other platforms,” says Karim Rayes, chief product officer for the video advertising platform Nexxen. “As a broadcaster, you kind of have to balance your traditional TV sales, which are still very much in demo, reach type of sales to modernizing for the digital world and what’s happening there.”

And that is the key, with big tech leveraging their consumer data, and big retail leveraging their buying data (in the case of Amazon, it’s both), traditional media companies will need to lean on what they do best in creating content, and hope that they can carve out enough user time and engagement to turn the ad business around … even if it ends up being a smaller piece of the overall pie.

As Nielsen noted in a January report, there remain millions of households in the U.S. that rely on over-the-air TV (it says 18 percent of households use an antenna, and over 4 percent use it exclusively, without an subscription video-on-demand or pay TV package). Those households are effectively shut out from the larger TV data sets (though Nielsen is quick to point out that its panel captures them).

But with media overall making a shift, media companies will need to adapt and respond, even if it means that a company that remains one of their biggest buyers of commercial time (see Walmart’s Mean Girls TV campaign last year) is now also a competitive threat.

And that might mean teaming up, either with each other or with companies that have that valuable consumer data. “[Entertainment companies] still have a very unique media asset that people are going to be looking to engage with,” Rayes says. “But you know, it’s all the bells and whistles around that in terms of performance measurement, audience targeting, etc. … what will be the most sensible thing for broadcasters is to is to partner with the right platforms in order to execute those strategies.”