How Walmart Connect Is Challenging Amazon Ads

How Walmart Connect Is Challenging Amazon Ads

by Tim Colucci Walmart

The rise of retail media networks continues to dominate the advertising landscape. There are hundreds of them now, offering advertising services built on all the data they collect from their customer online and in-store. Approximately 75 percent of the net retail ad spend in the U.S. is commanded by Amazon Ads. But there are many other impressive retail media networks that are ascending in this highly fragmented industry. Walmart Connect is one of them. Walmart Connect enjoys an advantage over Amazon Ads in one significant way: Walmart Connect can capitalize on data collected from customers shopping both online and in-store.

Within the U.S., nearly 139 million consumers frequent Walmart’s brick-and-mortar stores, website, or mobile application on a weekly basis. As a result, Walmart has nearly doubled the scope Walmart Connect, according to statements made by executives during a call about the retailer’s Q2 results for fiscal 2024. Walmart Connect experienced a 36 percent increase in ad sales year over year in Q2, mirroring the growth in Walmart’s global ad business, including Flipkart in India. Advertising for Walmart’s Sam’s Club brand saw a 33 percent year over year rise.

The growth is credited to a strong demand for sponsored product advertisements, a core aspect of the retail media sphere where Walmart Connect is a competitor. Leadership also recognized the growing appeal of in-store marketing methods. Earlier this year, Walmart said that customers at Walmart stores will soon encounter an increased number of third-party advertisements, including visual ads at self-checkout areas and TV sections, audio advertisements over the store’s radio system, and product samples at designated demo stations.

This move into advertising by Walmart mirrors similar strategies undertaken by other retailers such as Kroger, which recently entered an agreement to install digital smart screens in the refrigerated sections of numerous stores. Similarly, Target has started experimenting with in-store demonstrations and giveaways, like a co-branded “Barbie” event with Mattel, which was held in around 200 stores.

Walmart’s strategy of selling advertising space provides an additional revenue stream, leveraging the company’s vast influence and paving the way to higher-profit ventures. As a major discount retailer, Walmart operates close to 4,700 stores across the United States, with approximately 90 percent of the country’s population residing within a 10-mile radius of a Walmart location.

Executives at Walmart reported that, on average, advertisers see a 30 percent boost in the return on digital ad spending. In May, Walmart brought on a team of third-party partners to enhance marketing creativity and connect with consumers.

Walmart Connect’s ongoing success is indicative of the continued growth in retail media, notwithstanding some advertisers’ dissatisfaction with the fragmented nature of the industry and uncertainty in the broader digital advertising market. As a point of reference, Amazon Ads posted a 22 percent year over increase in ad sales in Q2, amounting to $10.7 billion. Amazon recently announced that it will expand its Sponsored Products ad unit to sites beyond Amazon, including Pinterest and BuzzFeed.

We suggest that advertisers:

  • Consider retailer-based ad networks as a complement to your existing digital ad strategy, not as a replacement.
  • Monitor the effectiveness of your advertising on Meta and Google amid the demise of third-party cookies. Retail media networks offer the advantage of tapping into first-party data that is unaffected by the erosion of third-party cookies.
  • Work with an agency partner that knows the terrain. For instance, at True Interactive, we complement our history of helping businesses advertising on Google and social media with expertise across retailer ad networks such as Amazon and Walmart.

To succeed with online advertising, contact True Interactive. Read about some of our client work here and our Walmart Connect expertise here.

Why Walmart Connect Expanded Its Advertising Partnerships

Why Walmart Connect Expanded Its Advertising Partnerships

by Tim Colucci Walmart

As the 2022 holiday season kicks into high gear, retail analysts are watching closely how much consumers will spend during a time of inflation. But it’s equally fascinating to understand how people shop. Walmart Connect, Walmart’s fast-growing advertising arm, believes that holiday shopping online – indeed all shopping online — will increasingly happen via social media, television commerce (t-commerce), and livestreaming. That’s one reason that Walmart Connect has expanded its advertising partner program to encompass social apps such as TikTok and streaming platforms such as TalkShopLive.

What Is the Walmart Advertising Partner Program?

Walmart Connect wants to help businesses advertise across the digital world beyond Walmart.com. To do that, Walmart Connect’s partnership program works with platforms to help brands scale, automate, and optimize their Walmart Connect advertising. These include partners that make it possible for Walmart Connect to expand self-service advertising through an application programming interface (API). Those API partners can be found here.

The partnership program is becoming more important to Walmart as it positions itself as a strong retailer-based ad platform alternative to Amazon Ads. And Walmart says the program is increasingly delivering value. For example, when BirdRock Brands turned to Pacvue (an enterprise software suite for eCommerce advertising) to scale its manual Walmart Sponsored Products campaigns, BirdRock was able to help design a campaign that ultimately experienced a return on ad spend 11 percent greater than its target, and an 83 percent increase in sales quarter over quarter.

What Did Walmart Announce About Its Advertising Partner Program?

Walmart has added a slew of advertising partners known as innovation partners. According to Walmart, these innovation partners will provide test-and-learn opportunities with formats such as social, entertainment, and live streaming throughout the entire holiday season. The newly expanded offering includes additional touchpoints and channels to reach customers wherever they are with new ad formats:

  • TikTok: this partnership provides an opportunity for advertisers to connect with potential shoppers on the red-hot TikTok platform. As Walmart noted, more than 50 percent of TikTok users say they watch ads on their feed instead of scrolling past them. The first-to-market pilot between TikTok and Walmart Connect will provide advertisers with the opportunity to serve in-feed ads on TikTok. This will leverage TikTok’s sound-on full screen video format together with Walmart Connect’s targeting and measurement.
  • Snap: the partnership with Snap enables advertisers to buy ad units including augmented reality, Collection Ads and Snap Ads through Walmart Connect and take advantage of the Walmart Connect’s geo-based measurement. This is the first time advertisers can buy Snap ad units through Walmart Connect and get in front of the unique Snapchat audience (75 percent of 13-34 year-olds in the U.S.), who hold over $1.9 trillion in spending power.
  • Firework: this partnership enables supplier-funded shoppable livestreams and short shoppable videos on Walmart.com/live. Walmart Connect is testing how brands can leverage Firework’s capabilities to create premium, engaging, mobile-first video experiences and, to start, has partnered with Johnson & Johnson and Procter & Gamble.
  • TalkShopLive: Walmart Connect is expanding its relationship with TalkShopLive to partnership enable supplier-funded shoppable livestreams on Walmart.com/live, TalkShopLive’s platform, brand and publisher sites, as well as across the web. Walmart Connect is testing how brands can amplify their content and connect with shoppers at scale. To start, it has already executed livestreams with Johnson & Johnson, Procter & Gamble, and Samsung, among others.
  • Roku: Walmart wants to help make TV streaming the next e-commerce shopping destination. Walmart touts Roku as America’s Number One TV streaming platform (citing Hypothesis Group research). So, Walmart has become the exclusive retailer to enable streamers on Roku to purchase featured products and have the transactions fulfilled by the chain. Walmart Connect will connect brands to customers through the Roku platform, and checkout will be seamless for customers, while advertisers receive insights on effectiveness via Walmart Connect measurement.

In announcing these partnerships, Walmart discussed how online search and shopping has become more diversified especially in the post-pandemic age. Seth Dallaire, Executive Vice President and Chief Revenue Officer, Walmart U.S., wrote in a blog post:

Consumers who turned to online shopping during the pandemic have chosen to stay there, with those returning to in-store relying on online research to guide their decisions. Consumers realized the importance of “connection” and were forced to adapt and connect in new ways including social feeds, livestreaming, mobile and more, specifically across video and connected TV. In fact, the predicted growth of social commerce from 10% of all e-commerce to 17% by 2025 will be driven by Gen Z and millennial consumers and nearly two-thirds (64%) of social media users — an estimated 2 billion social buyers — said they made a purchase on social media in the past year.

Now, Walmart Connect intends to do its part in connecting social media discovery to actual sales. So far, Walmart Connect’s partnerships have been hands-on in nature. Brands get custom reporting about their campaigns, based on activations on Walmart.com’s live shopping, TikTok, Snap, and Roku. But Seth Dallaire told Advertising Age that the partnership program expanding to the point where it would be more automated and widely available within Walmart Connect, so that brands could better target ads on social media and connected TV.

Contact True Interactive

To succeed with online advertising, contact True Interactive. Read about some of our client work here and our Walmart Connect expertise here.

For Further Insight

“Why Walmart Connect Is Winning,” Tim Colucci, February 25, 2022.

“Why Retailers Are Launching Ad Businesses,” Tim Colucci, January 11, 2022.

“Walgreens Doubles Down on Its Advertising Business,” Tim Colucci, May 19, 2021.

“Amazon Unveils New Ad Units Across Its Ecosystem,” Kurt Anagnostopoulos, May 4, 2021.

“Why Macy’s Launched an Advertising Platform,” Tim Colucci, March 3, 2021.

“Walmart Asserts Its Leadership in Advertising,” Tim Colucci, February 8, 2021.

Why Google Delayed Its Cookie-Killing Effort to 2024

Why Google Delayed Its Cookie-Killing Effort to 2024

by Tim Colucci Google

To no one’s surprise, Google announced that the company is postponing its plans to kill third-party cookies on Google Chrome. The deadline, originally scheduled for 2022, will now be late 2024. If this news seems familiar to you, you are not alone. In 2021, Google announced a delay to 2023, but now 2023 no longer is feasible.

Why?

The problem for Google comes down to the reality that the company raked in more than $209 billion in advertising revenue in 2021.

Google Ad Revenues

As a result, Google needs to proceed very carefully in its phasing out of third-party cookies, which advertisers use to serve up targeted ads to people by tracking their browsing habits across the web. The fact that Google announced the delay after it disclosed subpar quarterly earnings shows just how wary Google is of rocking the boat. To protect its advertising business, Google must:

  • Come up with an alternative to third-party cookies that will satisfy advertisers. If Google fails to do that, Google will lose business to competitors such as Amazon Ads. Amazon Ads deliver targeted ads based on their own data beyond the reach of Google’s privacy controls. And Amazon Ads isn’t the only one, as I blogged recently.
  • Mollify regulators. Because Google is the largest online ad platform in the world, Google must convince regulators that its consumer privacy changes won’t give Google an unfair advantage. As we blogged in 2021, U.K. regulators have already slowed down Google’s efforts. Regulators are concerned that the demise of third-party cookies could give Google too much power because Google can rely on first-party data on sites such as YouTube (which Google owns) to support its ad business.

Google’s approach to satisfy advertisers consists of the Privacy Sandbox, where Google experiments with alternatives to third-party cookies that enable targeting with stricter privacy controls in place. Those alternatives include:

  • Fledge, for remarketing new ads.
  • Attribution reports, for telling advertisers which ads work without compromising consumer privacy.

But it is taking some time for Google to devise solutions as noted above, and not without some considerable trial and effort. For the record, here is Google’s rationale for the delay this time:

The most consistent feedback we’ve received is the need for more time to evaluate and test the new Privacy Sandbox technologies before deprecating third-party cookies in Chrome. This feedback aligns with our commitment to the [U.K. Competition and Markets Authority] to ensure that the Privacy Sandbox provides effective, privacy-preserving technologies and the industry has sufficient time to adopt these new solutions. This deliberate approach to transitioning from third-party cookies ensures that the web can continue to thrive, without relying on cross-site tracking identifiers or covert techniques like fingerprinting.

That rationale underlines both the impact of regulators and the difficulty in developing an answer to third-party cookies.

This latest delay has annoyed advertisers who had been taking measures to adapt to a cookie-less world and now find themselves delaying their plans. Others simply do not like the uncertainty of living in an extended transitional period while Apple enacts privacy control measures of its own. We suggest that for now, advertisers:

  • Accept the reality that as third-party cookies crumble and technology companies enact privacy controls, your ads will be less targeted than they were – at least until the industry adapts to alternative tools being developed. This does not mean you should stop advertising online. Online advertising remains the most efficient and cost-effective way to reach your audience.
  • Try alternatives beyond Google’s Privacy Sandbox. These include alternative IDs, contextual targeting, and seller-defined audiences.
  • Work with your advertising agency to understand what’s happening and how you may be affected. That’s exactly what our clients are doing with True Interactive. That’s what we’re here for.
  • Don’t abandon ship with ads that rely on web tracking. As you can see with Google’s announcement, things may not proceed the way Google plans.
  • Do invest in ways to leverage your own (first-party) customer data to create personalized ads. We can help you do that.
  • Consider ad platforms such as Amazon Advertising and Walmart Connect, which give businesses entrée to a vast base of customers who search and shop on Amazon and Walmart. True Interactive offers services on both platforms in addition to our longstanding work on Google, Bing, and other platforms. Learn more about our services with Amazon Ads here and Walmart here.

One other important consideration: remember, Google is not the only company doing away with third-party cookie tracking. Apple did so with Safari in 2020, and Mozilla with Firefox. The writing is on the wall: it’s time to adapt to a world without third-party cookies. True Interactive can help you do that.

Contact True Interactive

To succeed with online advertising, contact True Interactive. Read about some of our client work here.

Lead image source: https://unsplash.com/@laurenedvalson

For Further Reading

Three Takeaways from Amazon Prime Day 2022

Three Takeaways from Amazon Prime Day 2022

by Morgan Reilly Amazon

Amazon has announced that Amazon Prime Day 2022 was the biggest Prime Day Event ever. Prime members purchased more than 300 million items worldwide during Prime Day 2022, which took place July 12-13. Amazon did not disclose sales results, but the 300 million items purchased was up from 250 million in 2021, and research firm Numerator estimates that spend per household neared $200, up from the high $150’s in years past. This is an impressive measure especially amid soaring inflation. So, who is buying all this stuff, what are they buying, and how are they buying? This is a significant question. The answers give advertisers clues about online purchasing behavior during inflationary times. Well, Numerator took a close look at the numbers. And they say a lot.

Women Drive eCommerce

High income, suburban women were top Prime Day 2022 shoppers. Compared to Prime Day 2021, this year’s shoppers were marginally older, and slightly more likely to come from middle or low income rural households.

Women dominate Prime Day

These figures validate why brands market to women. Women are responsible for most purchases in a typical household, and since there are 3.9 billion women in the world, marketers are eager to gain as much of their spend as possible. But marketers need to be mindful to tailor their advertising to women – for example by respecting their diversity and steering clear of tired themes (such as always depicting moms as caretakers and nurturers).

Amazon Wins by Tapping into Its Customer Base

95 percent of households knew it was Prime Day before shopping, and most learned about the event directly from Amazon. Among those who were aware of the sale, 41 percent say it was the primary reason they shopped on Amazon and another 42 percent said it was a contributing factor. And Amazon dominated the list of most popular products sold.

Amazon dominates Prime Day

These numbers underscore the power of Amazon to capitalize on its built-in customer base by promoting big ticket events to them. Amazon has successfully developed hundreds of in-house products and brands, and the company knows how to market them to Prime members.

This will pressure businesses to get out in front of big-tent sales such as Back-to-School, Black Friday, and Cyber Monday even more so than they have, especially by re-marketing and advertising to their own customers. This is especially true during inflationary times. One third of Prime Day shoppers waited to buy something until Prime Day, with another 17 percent using the event as an opportunity to stock up on sale items. On the flip side, over a fourth of Prime Day shoppers passed up a good deal on a non-necessity. Businesses will double down on special sale days in 2022, knowing that their customers may very hold out for promotional specials to maximize savings.

It’s also worth noting that Amazon didn’t dominate every product sold, with products such as Dawn Dish Soap, Frito-Lay, and Tide doing well. Businesses have learned that it’s better to join Amazon than to try and beat the retailing giant. And retailers who tried to compete with Amazon by creating their own quasi-Prime Day events did not succeed: although 54 percent of Amazon Prime customers considered buying from other retailers during Prime Day (particularly Walmart and Target) only 24 percent actually made purchases elsewhere in addition to Amazon, with about one-in-ten still considering a non-Amazon purchase at the time they were surveyed.

This is why Amazon Ads is succeeding: the company has monetized all the data it collects about its customers and developed attractive ad units for companies that want to reach them. The advertising arm of Amazon achieved 32 percent year-over-year growth in 2021, which amounted to $31.2 billion in revenue. Amazon Ads will continue to be a huge growth engine for Amazon, as more businesses try to reach the customers searching for things to buy on Amazon every day. (Amazon is now bigger than Google for product searches.)

Live Stream Shopping Is on the Rise

Amazon noted that Amazon Live Prime Day streams had more than 100 million views. Thousands of users hosted livestreams during this year’s event, Amazon said. Livestreaming makes it possible for advertisers to sell products via live demonstrations and promotions. Live shopping is especially big in China: according to eMarketer, live shopping accounted for nearly 12 percent of China’s retail ecommerce sales in 2021. Coresight Research estimates the live-stream shopping market will reach $20 billion in 2022 and grow to roughly $65 billion by 2023. Several livestream platforms have proliferated. But livestream shopping needs to be done well, with great production values and authentic, engaging personalities to connect with shoppers. This is why businesses are turning to ready-made platforms such as Amazon Live.

Contact True Interactive

To succeed in Amazon’s world, contact True Interactive. Our experience with Amazon Ads makes us well suited to help your brand succeed all year-round.

Amazon’s Next Frontier: Local Advertising

Amazon’s Next Frontier: Local Advertising

by Jessica Skopek Amazon

Amazon recently announced for the first time just how big Amazon Ads has become. And the number is very big. As in $31.2 billion. Amazon said in its in 2021 earnings announcement that Amazon Ads had achieved 32 percent year-over-year growth, which includes sales of advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising.

$31.2 billion is not quite the size of Meta’s and Google’s ad businesses. By comparison, Google achieved $209.5 billion in ad revenue for its most recent fiscal year, and Meta achieved roughly $115 billion for the same time period. But Amazon Ads eclipses Microsoft, Pinterest, and Snap, and the company has earned a place alongside Google and Meta as one of the big three online advertising platforms.

And now, it looks like Amazon plans to get bigger in an untapped market: location-based advertising. Business Insider reported recently that Amazon is building a local ad business by advertising positions for a Local Ads team in major cities such as Chicago and New York. Apparently Amazon Ads will offer a slate of ad units, including streaming TV ads and a demand-side platform that sells ads off Amazon’s website. (Note that Amazon generates the lion’s share of its ad revenue from search ads that appear on the Amazon website; but Amazon has invested more in ad tech to get bigger ad budgets from advertisers.)

This is an intriguing development, to say the least. Location-based advertising capitalizes on the fact that local searches by consumers are wildly popular. This is a big reason why hyper local sites such as Nextdoor have achieved strong growth: people typically look for things to buy at stores close to their homes. So, businesses have a strong motivation to rank well in those “near me” searches, and of course advertising can amplify their presence. Meta and Google both offer strong location-based ad services, but lately Meta has taken a financial hit because of the impact of Apple’s Application Tracking Transparency privacy controls, which limit the effectiveness of ad targeting, including location-based ad targeting.

According to a Deutsche Bank report from 2021, 75-percent of Meta’s advertising revenue came from small businesses. Meta could be vulnerable if Amazon’s plans are rolled out. And Amazon doesn’t have to worry about Apple’s privacy controls. The company can sell ads based on first-party data, or data that people on Amazon share when they search and purchase (Apple’s privacy controls do not affect first-party data). Now, consider the fact that Amazon operates brick-and-mortar businesses such as Whole Foods and Amazon Fresh, which rely on location-based advertising. An Amazon location-based ad service could benefit the company’s own stores.

But that’s not all. Just as Amazon sells online ads to merchants, the company is apparently banking on the ability to do that for retailers, automotive dealers, restaurants, and other merchants that need to be present in local search results.

For now, Amazon will continue to grow its ad business mostly through Amazon.com, where companies pay to be listed as a “sponsored product” high up in the search results. Amazon also offers video commercials and ads on Amazon’s FireTV device. Amazon Ads also helps brands with online advertising on sites that it does not own. And Amazon has developed advertising in devices and platforms such as Twitch.

It will be interesting to see how this development plays out especially with Walmart leveraging its own small but growing ad business that capitalizes on the company’s online/offline presence. Walmart could be a strong alternative to Amazon.

We recommend that advertisers manage the online ad solutions that are most relevant to their own customers’ journeys from awareness to purchase. Keep an eye on Amazon. The company has built incredible momentum, and an increasingly privacy-centric landscape favors the growth of its ad business.

Contact True Interactive

At True Interactive, we monitor new ad products all the time and help our clients prosper amid the evolving landscape. Contact us to learn how we can help you. Learn more about our Amazon Ads services here.