🔒 Walmart takes on Amazon… in advertising – The Wall Street Journal

DUBLIN — It’s like a gold rush. Companies like Facebook and Google were the first to strike it rich, turning their giant troves of customer data into cash through the alchemy of advertising sales. Now, everyone is trying to get a piece of the action. Amazon has been panning for gold successfully – it has become America’s third-biggest seller of digital ads (after Facebook and Google). Walmart is reportedly hoping to find its own rich ore vein by leveraging the huge amount of information it has about the people who visit its thousands of stores. But the advertising gold rush raises a few questions. After all, there’s only so much ad budget to go around. Digital advertising can continue to achieve double-digit growth for a good while yet by cannibalising TV, print, outdoor, and other traditional outlets. The bigger question is – how much can the overall advertising pie grow? After all, advertising is just a line item on the budgets of the world’s consumer products – food, fashion, electronics, and the like. Is the gold rush a mirage, a mere reshuffling of existing ad dollars from one outlet to another? Or are there enough untapped markets out there – consumers in Africa and Asia, say – to sustain an advertising gold rush for years to come? And what about the emerging issues of data privacy? Will Walmart find itself embroiled in the type of privacy scandals that Facebook has been dealing with for the last few years? Gold rushes are thrilling and offer enormous rewards. But they are not risk-free. – Felicity Duncan

Walmart Joins Amazon in Chase for Ad Dollars

By Sarah Nassauer

Walmart Inc, the world’s largest retailer, wants to become a big seller of advertisements too.
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As Amazon.com Inc. expands its share of the online advertising market, Walmart is trying to entice suppliers and other marketers with its own ad space and access to shopper data.

Walmart has long offered companies like Unilever PLC, Kellogg Co. and Hollywood studios space to place ads inside its 4,600 US stores. It also has a digital ad business that lets suppliers target online ads based on its shopper data, but looked to an outside firm to sell space on its websites and across the web.

Now it’s in the process of bringing its digital ad business in-house, say Walmart executives, winding down its relationship with Triad, a unit of WPP PLC which sells ad space on retail websites and other digital properties. Triad declined to comment.

Walmart also plans to bring its store and digital ad teams closer together, using Walmart’s vast trove of shopper data to sell marketing opportunities in more parts of its sprawling business, including Vudu, its video streaming service.

Digital advertising is a tough business that is dominated by Alphabet Inc.’s Google and Facebook Inc. But deep-pocketed companies with large amounts of data on their customers are in the best position to mount a challenge to that “duopoly,” ad industry experts say. Amazon has already made significant inroads, and AT&T Inc. has designs on building a big digital ad business after acquiring media giant Time Warner Inc.

Walmart, itself, tried several years ago to move into the online ad market but didn’t make much of dent. Now, after a major push into e-commerce, Chief Executive Doug McMillon is making a renewed effort to build an ad business that can challenge Amazon for more of brands’ marketing budgets.

Walmart hopes that if “I’m the CMO of a large branded manufacturer I now think about Walmart as a network I can go advertise on,” said Steve Bratspies, chief merchandising officer for Walmart US. The company believes the advertising can be more efficient than with competitors because marketers benefit from Walmart’s online and store purchasing data, said Mr. Bratspies.

For example, a customer who purchases a bicycle in a Walmart store might see ads for a helmet on Facebook or Pinterest. The ad would take the shopper back to walmart.com or sister site jet.com to buy the helmet.

Walmart offered similar services through Triad but if a supplier wanted to advertise a new snack, it had to work with Triad on the digital marketing and a separate Walmart team to hand out samples in stores.

Walmart executives discussed the company’s new focus on building a bigger advertising business for suppliers at a conference near its headquarters in Bentonville, Ark., on Tuesday.

Ramping up advertising revenue is one way Walmart aims to fend off Amazon, shoring up another potential source of profit as it invests heavily to boost online grocery sales, experiment with new shopping technology like virtual reality and increase worker wages.

In recent years, Walmart’s sales have increased strongly in stores and online, but online profits are shrinking, leaving stores as the main profit engine for a business with more than $500bn in annual global sales.

As Amazon leans on selling space in its cloud-computing operation Amazon Web Services and growing ad revenue to support an expanding retail empire, Walmart’s Mr. McMillon wants more streams of revenue for his business, said people familiar with his thinking. Mr. McMillon is rallying executives to focus on advertising, these people said, and to bring together what has been a disparate ad sales approach splintered between stores and online.

Last year, Amazon – which sells ads in its dominant e-commerce store, on devices like the Kindle and Fire TV, and across third-party websites – became the third-largest seller of digital ads after Facebook Inc. and Alphabet Inc.’s Google, according to eMarketer. Walmart’s digital ad revenue was too small to track, said the firm.

Walmart has data on hundreds of millions of shoppers who visit its stores but its websites draw a fraction of the monthly visitors of the tech giants. Several years ago, Walmart made a similar online ad push, called Walmart Exchange, to sell ads on walmart.com. It ended up outsourcing most of the ad-sales services to Triad but kept Walmart’s customer data in-house.

“Our data has never been monetised and we have a tiny ad business. It could be bigger,” Mr. McMillon said at an investor conference last October.

Other retailers including Target Corp. and Kroger Co. are also pitching themselves to advertisers as a place to promote products directly to shoppers, using their customer data to advertise online and in stores.

Some bricks-and-mortar retailers are feeling Amazon’s pinch in the sector known as trade marketing, which aims to get products onto shelves and in the best locations in stores to get noticed.

Those budgets, particularly used by packaged-goods manufacturers, are increasingly shifting to Amazon, advertising vendors, analysts and brands say. Trade marketing attracts an estimated $178bn a year in the US and makes up most of Amazon’s ad dollars in the US, Morgan Stanley analysts estimated.

Walmart also has courted in-store marketing dollars, but in recent years has encouraged brands to lower prices to gain an advantage rather than paying to market products in aisles. By building an ad network, Walmart aims to give suppliers a way to advertise across the company while keeping product prices low, said Mr. Bratspies.

“We are not going backwards on EDLP,” he said, using Walmart’s acronym for Everyday Low Price. “They might be advertising on cable TV. Instead of cable TV you should put it into Walmart Media.”

A number of advertisers have brought ad-creation and buying operations in-house in recent years. Walmart’s move is different, in that it’s bringing ad sales in-house. Walmart will need to build a team of media and marketing executives that not only can sell ad space but also help its suppliers create ads for its properties – no easy feat for a large company that typically outsources such tasks.

— Alexandra Bruell contributed to this article.

Write to Sarah Nassauer at [email protected]

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