Walmart plans to roll out its first self-serve advertising tools to steal away Amazon's core advertisers. Here's everything we know about it.
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- Walmart Media Group, Walmart's advertising arm, plans to roll out its first self-serve advertising tools and an API to compete with Amazon early next year, according to four advertising agencies and tech vendors.
- The tools signal that Walmart has big ambitions to grow its advertising business, which has relied on direct relationships with sales reps up until now.
- Walmart has been building up its ad practice in-house by acquiring adtech companies and is currently hiring for roles overseeing marketing partners.
- Execs said Walmart could struggle to keep up with Amazon's size and focus on e-commerce, though.
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Walmart is taking a page from Amazon's playbook to win over advertisers.
The world's largest retailer has steadily been pitching more advertisers on its advertising arm, called Walmart Media Group, this year. According to four agencies and tech vendors that specialize in e-commerce advertising, Walmart will roll out a self-serve advertising platform and API early next year that could open up ad budgets from hundreds of consumer-packaged-goods brands that rely on Amazon for sales.
Walmart has built two pieces of advertising technology that put it in direct competition with Amazon. A self-serving platform allows advertisers to buy ad space through machines. The company is also building an API - or application programming interface - that allows third party tech firms to plug into Walmart to bid, buy and manage ad spend programatically.
Until now, advertisers have only been able to buy Walmart ads directly from human reps. Large ad platforms like Facebook, Google, Amazon, Snap and Pinterest use APIs to allow big advertisers to manage their spend and set ad prices. Walmart's API resembles Amazon's version that e-commerce advertisers use to buy search and display ads, according to two tech firms who have seen Walmart's API.
Walmart sells search and display ads that appear on its website and app as well as OTT ads for Vudu, its streaming service. The self-serve platform and API will only power search and display ads that are aimed at its core consumer-packaged-good advertisers.
According to sources, Walmart is testing its adtech with a small number of consumer-packaged goods and plans to make it more broadly available to advertisers in the first quarter of next year. A spokesperson from Walmart confirmed that it is developing both pieces of technology but declined to say when the tools will be widely rolled out.
Walmart Media Group is also hiring a head of advertising partners to work with marketers.
"They have aspirations to push themselves to be as sophisticated as Amazon," said Kacie McKee, director of e-commerce at Wavemaker. "They're in the zone with hiring and behind the scenes building the infrastructure to become pretty powerful in media."
Nestlé, Arm & Hammer and Nabisco are currently running search ads on Walmart targeted for searches like "chocolate" and "laundry detergent."
In theory, the tools will help e-commerce advertisers better understand how ad performance compares across multiple platforms.
"If you're a big CPG company that spends a lot of money in advertising, it's very convenient if you can look at your Amazon and Walmart advertising through one single interface and manage it all there," said a tech vendor that helps e-commerce brands run ad campaigns on both Amazon and other retailers' sites. "It's a big opportunity for partners like us - it's really a whole new category of adtech."
Another tech vendor who has been involved with Walmart's beta test said that Walmart's ads perform better than Amazon because there is less competition for keywords on Walmart.
"Amazon has built the platform that sellers use to connect with over 100 million Prime subscribers - it makes a lot of sense that Walmart is going to offer the same thing," said an executive at the tech vendor. "We've been encouraged with the early data from Walmart."
Walmart has big ad ambitions
Walmart has run an advertising business since 2005 but has made a bigger push for ad budgets over the past year. In May, Walmart made its first big pitch to advertisers at an event held in New York that reportedly included executives from Procter & Gamble, Coca-Cola and Mattel.
Walmart has focused on building up its advertising business in-house. In February, the company ended a long-time deal with WPP's Triad, which previously handled ad sales for Walmart. Since then, Walmart has beefed up its hiring efforts, specifically looking for agency talent to fill Walmart Media Group roles, said two sources. Walmart has also acquired several adtech companies, including Polymorph Labs in April.
The retailer still has a ways to go to catch up with Amazon
According to Joshua Kreitzer, founder and CEO of Channel Bakers, an Amazon-focused ad agency, Amazon is much bigger and has a big head start in advertising over Walmart. For example, advertisers can't use search tactics to target competitors or specific audiences, he said.
Amazon is expected to make $11 billion in advertising this year.
Wavemaker's McKee noted that since Walmart stopped working with Triad, she has noticed that Walmart is still working out kinks in building teams and tools for advertisers. Triad and Wavemaker are both owned by WPP.
"They're too internal in terms of building out their own processes, figuring out who to hire and who works with agencies versus directly with clients," she said.
She estimated that 70% to 90% of e-commerce clients' shopper marketing budgets go towards Amazon. While Amazon is the biggest, she said that advertisers are looking to rely less on Amazon as a sales and advertising platform.
"There is this hunger for Walmart to be bigger and move faster because [clients] want to diversify from an investment strategy perspective," she said.
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