Why Walmart Connect Is Winning

Why Walmart Connect Is Winning

Walmart

For the first time, Walmart shared how much money its advertising business, Walmart Connect, is generating. And business is good. In announcing its quarterly earnings February 17, Walmart said that Walmart Connect achieved $2.1 billion in revenue in 2021. Why is Walmart Connect succeeding?

What Is Walmart Connect?

Walmart Connect is the name of Walmart’s advertising business. Walmart Connect creates targeted advertising by capitalizing on the customer data it has accumulated about search and shopping on Walmart.com and in Walmart stores. Walmart Connect offers many ad units. For example, Search Brand Amplifier makes it possible for a brand’s logo, a custom headline, and up to three of its products appear at the top of a web page (on Walmart.com), thus improving brand recognition and showcasing a company’s product portfolio.

What Did Walmart Announce?

In a conference call with Wall Street analysts, Walmart said that Walmart Connect is growing remarkably well. According to Walmart’s Chief Financial Officer Brett Biggs, “Walmart Connect advertising experienced robust sales growth this year with a strong pipeline of new advertisers and large growth opportunities ahead. In fact, the number of active advertisers using Walmart Connect grew more than 130% year over year. And about half of the ad sales came from automated channels in Q4, more than double last year. We expect Walmart Connect to continue to scale over the next few years with plans to become a top 10 ad business in the midterm.”

Why Is Walmart Connect Succeeding?

Walmart Connect is benefitting because the company relies on first-party customer data. Ad platforms that rely on first-party customer data are becoming more attractive as businesses such as Apple and Google make it harder for advertisers to capitalize on third-party customer behavior data to create online ads. First-party data is beyond the reach of these privacy initiatives. That’s a big reason why retailer-based ad businesses are flourishing – and Walmart is not the only one, as we blogged here.

Another reason for the success of Walmart Connect is that the company has offered automated advertising tools. As noted above, in a call with Wall Street analysts, Walmart said that half the advertising revenue in 2021 came through automated channels. This suggests that Walmart is doing a good job offering programmatic advertising — or the use of automated technology for media buying (the process of buying advertising space), as opposed to traditional (often manual) methods of digital advertising.

Although we don’t have any numbers yet, it’s also likely that Walmart’s physical stores will play a role in the growth of Walmart Connect. Walmart Connect sells ads on more than 170,000 screens — including televisions and self-checkout kiosk screens — located inside more than 4,500 U.S. stores. For example, TV Wall Ads provide placement of an advertisement on thousands of in-store TV screens in stores, with the goal being to influence shoppers while they’re making purchase decisions. Keep an eye on the in-store ad units. They are primed for growth as people become more comfortable shopping in stores post-pandemic.

What Should Advertisers Do?

  • Consider retailer-based ad networks as a complement to your existing digital ad strategy, not as a replacement. If your strategy focuses on Facebook and Google, for instance, don’t move your ad dollars over to a retailer network. Remember that Facebook and Google also already offer proven advertising products that capitalize on their vast user base. For example, location-based digital advertising tools help strengthen Google’s advertising services at the local level.
  • 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.
  • Learn more about the ad products that might apply to you – and those products are evolving. In 2022, more retailers will use first-party data to help businesses create more targeted ads off-site – meaning advertising across the web, as well as via 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 More Insight

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

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

Why Retailers Are Launching Ad Businesses

Why Retailers Are Launching Ad Businesses

Advertising

Best Buy recently announced the launch of Best Buy Ads, a new in-house media company. Best Buy Ads offer a range of ad units including paid search ads, onsite and offsite display ads, onsite and offsite video ads, social ads, and in-store ads. According to Best Buy, Best Buy Ads capitalizes on the fact that Best Buy interacts with its customers three billion times a year. From those interactions, Best Buy learns about the search and shopping habits of its customers. This makes it possible for the retailer to sell ad units that target a specific demographic: people with a strong interest in consumer technology.

Best Buy is the latest retailer to launch an ad business. Other examples include:

  • Walmart Connect, the leading ad business run by a brick-and-mortar retailer.

As with Best Buy, they offer services ranging from display to media buying. They all have one thing in common: they monetize their customer data.

Why an Ad Business Appeals to a Retailer Like Best Buy

An online advertising business is appealing to Best Buy for a number of reasons, including:

  • This is a proven model. The growth of Amazon Advertising (Amazon’s own in-house ad operation) speaks for itself. Amazon Advertising is so successful that Amazon is now challenging Google’s and Facebook’s dominance of online advertising. In light of this, we’ve witnessed a slew of retailers jumping into the ad business. For example, Walmart Connect (Walmart’s ad operation) has enjoyed strong growth.
  • Customer data is a competitive weapon. Retailers such as Best Buy collect a treasure trove of data about their customers, starting with their search and shopping preferences. This data gives each retailer an edge because they can promise advertisers access to a targeted audience with intent to buy. As noted, Best Buy targets consumers in the market for home electronics. By contrast, the recently launched ad platform from retailer Macy’s targets a fashion-conscious consumer. Walmart promises entrée to grocery shoppers and price-conscious consumers. Of course, retailers must know how to mine all this data and then develop attractive ad units. But the data provides a built-in advantage.
  • Retailers’ customer data is getting more attractive to advertisers. Businesses are looking for alternative ways to reach consumers amid the demise of third-party cookies, which are crucial for third-party ad targeting, and the advent of stricter consumer privacy controls on Apple’s iOS, which has also made it harder for businesses to target consumers with ads. With third-party ad targeting across the web threatened, platforms that give advertisers entree to shoppers within retailers’ walled gardens are more appealing. Basically, retailers are using their own customer data to do what Apple and Google won’t do for advertisers anymore.
  • e-Commerce is booming. Online ad businesses in particular are catching fire because of the e-commerce boom. According to S&P Global Market Intelligence, “The e-commerce industry is expected to hold on to pandemic-elevated sales into 2022, with big retailers including Amazon.com Inc. and Walmart Inc set to benefit as consumers stick to new, hybrid shopping patterns.” S&P Global Market Intelligence says U.S. e-commerce sales are on track to exceed $1 trillion for the first time in 2022. Businesses want to reach those shoppers, which creates a demand for online advertising. The surge in online commerce also means more people are using retailers’ sites to search and shop, which creates more valuable customer data that retailers’ ad businesses can monetize. This also means advertising.

What Advertisers Should Do

  • Consider retailer-based ad networks as a complement to your existing digital ad strategy, not as a replacement. If your strategy focuses on Facebook and Google, for instance, don’t move your ad dollars over to a retailer network. Remember that Facebook and Google also already offer proven advertising products that capitalize on their vast user base. For example, location-based digital advertising tools help strengthen Google’s advertising services at the local level.
  • Do, however, monitor the effectiveness of your advertising on Facebook and Google amid the demise of third-party cookies and the onset of Apple’s App Tracking Transparency, which includes more privacy controls that may make Facebook ads less effective (which remains to be seen).
  • 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.
  • Learn more about the ad products that might apply to you – and those products are evolving. In 2022, more retailers will use first-party data to help businesses create more targeted ads off-site – meaning advertising across the web, as well as via connected TV.

Contact True Interactive

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

For More Insight

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.

Walgreens Doubles Down on Its Advertising Business

Walgreens Doubles Down on Its Advertising Business

Advertising

In December 2020, Walgreens launched its own advertising business, Walgreens Advertising Group, wag.  Now Walgreens is doubling down on advertising by expanding wag’s capabilities into over-the-top (OTT) services, connected TV (CTV) and traditional linear TV across 100 apps and 10 supply-side platforms, with an inventory of 2.5 billion daily impressions. This development demonstrates a growing trend of retailers using their customer data to provide advertising services.

What Walgreens Announced

Walgreens has touted wag as an effective way to leverage insights from 100+ million Walgreens loyalty members and one billion daily digital touchpoints with customers to create personalized advertising. wag provides businesses access to advertising platforms on Walgreens-owned and third-party channels, with the potential of achieving higher match rates versus the industry standard method of digital media buying. wag provides the ability to reach shoppers across digital display, video, social, streaming audio, email as well as Walgreens digital platforms and stores. On May 17, Walgreens announced that wag will extend its reach into television. According to Walgreens, the new capability consists of:

  • The addition of OTT & CTV inventory accessible via the wagDSP — a proprietary programmatic buying technology that integrates Walgreens customer and transaction data with dynamic creative capabilities and real-time optimization.
  • A first-to-market collaboration with OpenAP, and integration with the OpenID that enables brands to reach audiences powered by Walgreens first-party data as part of their television buys. Brands will be able to collaborate with Walgreens to execute against deterministic audiences now, and closed loop measurement will be in place by the start of the broadcast year.

Inventory is sourced through 100+ apps and 10 supply-side platforms with 2.5 billion+ available impressions daily, including access to inventory from key platforms.

Brands activating against this inventory can do so with all of the same functionality, optimization, and measurement capability as in digital video and display executed through the wagDSP. This enables people based media targeting, with measurement and real-time optimization.

Why the Expansion of Walgreens Advertising Group Matters

This news matters for two reasons:

  • wag’s expansion is part of a broader effort by retailers to capitalize on their own-first party data to provide advertising services. Retailers such as AmazonDollar TreeKrogerMacy’sTarget, and Walmart are all monetizing their first-party customer data by building ad businesses. Each retailer can give advertisers access to different types of consumers. For instance, wag gives advertisers access to consumers in the health and wellness space, and Macy’s is geared toward businesses wanting to reach fashion-conscious shoppers. We expect more of these platforms to emerge as businesses seek alternative ways to reach consumers amid the demise of third-party cookies, which are crucial for third-party ad targeting. With third-party ad targeting across the web threatened, platforms that give advertisers entree to shoppers within retailers’ walled gardens are more appealing.

What Advertisers Should Do

We suggest that advertisers:

  • Consider retailer-based ad networks as a complement to your existing digital ad strategy, not as a replacement. If your strategy focuses on Facebook and Google, for instance, don’t move your ad dollars over to a retailer network. Remember that Facebook and Google also already offer proven advertising products that capitalize on their vast user base. For example, location-based digital advertising tools help strengthen Google’s advertising services at the local level.
  • Do, however, monitor the effectiveness of your advertising on Facebook and Google amid the demise of third-party cookies and the onset of Apple’s App Tracking Transparency, which includes more privacy controls that may make Facebook ads less effective (which remains to be seen).
  • Learn more about the ad products that might apply to you – and those products are evolving, as the expansion of wag demonstrates. In addition, we recently blogged about how Amazon is creating more ad units. The time may come soon when advertising on the web means constantly capitalizing on walled gardens’ offerings.
  • Work with an agency partner that knows the terrain. For instance, at True Interactive, we help businesses advertise through connected TV, complementing our deep expertise with online advertising on Google, social media, and the retailer networks such as Amazon and Walmart.

Contact True Interactive

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

Five Lessons From the 2021 Ad Spending Surge

Five Lessons From the 2021 Ad Spending Surge

Advertising

Ad spending is surging. As reported in The Wall Street Journal, U.S. companies are expected to spend 15 percent more on advertising in 2021 year than they did in 2020. That’s because consumer confidence is increasing, and the pace of Covid-19 vaccinations is accelerating. And digital is getting a bigger share than ever of the advertising pie:

Digital Share of Ad Spending

Announcements from technology giants and social media apps in recent days underscore just how much businesses are investing into digital advertising:

  • As we reported on our blog, Amazon Advertising and Facebook reported strong year-over-year ad revenue growth in their most recent quarterly earnings announcements.
  • Alphabet announced 32 percent year-over-year ad growth for Google, demonstrating an impressive rebound from a slump triggered by the pandemic.

Amid this spending surge, we see some important lessons emerging:

  • Businesses that maintained their spending levels during the depths of Covid-19 in 2020 are at an advantage over those who pulled back and are now kickstarting their spending. Consumer behavior and sentiment are changing faster than ever. We predicted in 2020 that reducing ad spend during the pandemic would catch businesses flat-footed when consumer behavior shifted again – as it has done in 2021.
  • We’ve hit an inflection point with digital. As the stay-at-home economy takes hold, consumers are remaining online at higher levels than ever. As a result, online spending continues to accelerate. Businesses that asked, “But how long will the growth last?” in 2020 fell behind those that saw the surge for what it is: a behavioral change. The faster businesses adapt to those changes by boosting their online advertising, the sooner they’ll attract shoppers online.
  • The tech giants are experiencing a golden era. We’ve seen the tech giants – namely Amazon, Apple, Facebook, Google, and Microsoft – experience heavy criticism in recent years for reasons too numerous to summarize in a blog post. And of course the specter of antitrust lawsuits looms over Facebook and Google (and Apple in Europe). On top of that, they’re at war with each other, and the demise of third-party cookies calls into question how well advertisers will be able to target consumers across these platforms. But guess what? Amid the blowback, the tech giants continue to run the table, as noted above. Smart advertisers aren’t allowing negative headlines to scare them away from the tech giants. They’re watching how these platforms innovate with new ad units that monetize the surging online audience.
  • Retail ad platforms are on the rise. Savvy marketers are capitalizing on the fact that retailers such as Amazon, Dollar Tree, Kroger, Macy’s, Target, and Walmart are monetizing their first-party customer data by building ad businesses. Each retailer can give advertisers access to different types of consumers. We expect more of these platforms to emerge, contributing to robust ad growth.
  • Social commerce is going to fuel more ad spending. As we discussed on our blog recently, businesses should capitalize on social commerce advertising tools such as Pinterest Product Pins, through which a business can connect its product catalog to Pinterest, filter and organize inventory, create shopping ads, and measure results; or numerous ad units on Instagram that make it easier for businesses to turn advertising into shopping experiences.

We urge businesses to take a fresh look at how your customers’ journeys are changing amid the rise of digital-first living and spending. Monitor performance closely as consumer behavior fluctuates. Businesses that invest in strong real-time analytics tools will have the upper hand.

Contact True Interactive

At True Interactive, we know how to help businesses navigate the complex waters of online advertising. Contact us. Learn more about our work here.

Photo by Adem AY on Unsplash

Amazon Unveils New Ad Units Across Its Ecosystem

Amazon Unveils New Ad Units Across Its Ecosystem

Amazon

Amazon keeps giving advertisers more reasons to choose its advertising platform, Amazon Advertising.

We recently blogged about the fact that Amazon and Facebook are steadily chipping away at Google’s online advertising marketshare. As eMarketer reported, Amazon’s share of the online advertising market increased from 7.8 percent in 2019 to 10 percent in 2020. Amazon just reminded us why Amazon Advertising will keep growing: product innovations.

We’ve already talked about how Amazon keeps launching ad units such as Sponsored Products and Sponsored Brands that make it possible for businesses to place ads on Amazon, which functions as a powerful search engine for people looking to purchase things. As reported in Advertising Age, Amazon is rolling out new products that extend beyond the Amazon site:

  • Amazon will expand advertising opportunities on Fire TV, which competes with devices such as Apple TV and Roku to stream content on connected TVs for millions of viewers. Fire TV is more than a device. It’s a way for advertisers to reach people as they browse and discover new entertainment. One new ad unit, Sponsored Content Rows, is designed for businesses to promote content such as new shows and movies in the form of a row (or carousel) of sponsored content while people browse for shows on their connected TVs (akin to sponsored search results in a Google search engine results page).
  • Amazon also expanded the places where it will show display ads across the Amazon network, including Fire TV, Prime, IMDb TV and Twitch. “We’re making it easier by introducing sponsorship opportunities paired with high-quality content from Prime Video, IMDb TV, Twitch, and third-party content,” Amazon said. This is an important development because it shows that Amazon is expanding its advertising reach beyond the core Amazon site. Many consumers are not aware that Amazon’s network of brands includes sites such as IMDb and Twitch – but indeed they’re part of Amazon’s empire. Amazon is figuring out more ways for advertisers to monetize those popular sites. (Twitch ranks 32 among the world’s 50 most popular websites, with Amazon ranking 13.)

This news comes on the heels of a huge week for Amazon. On April 29, The company announced quarterly earnings that exceeded analysts’ expectations. Although Amazon does not disclose revenue results for Amazon Advertising, it’s estimated that Amazon Advertising realizing revenue growth of 77 percent year over year to achieve $6.9 billion in the first quarter alone.

Earlier in 2021, Amazon scored a huge advertising coup when Amazon Prime Video became the first streaming service to secure an exclusive NFL national broadcast package, which will begin in 2022. The agreement will open up more advertising revenue streams as Amazon monetizes the value of the audience that relies on Amazon Prime Video.

It’s important that advertisers keep their options open by capitalizing on the power of platforms such as Amazon that are harnessing the value of their first-party data to create ad units. (We’re seeing the emergence of more similar platforms such as the Macy’s Media Network.) True Interactive works with brands to capitalize on these offerings such as Amazon Advertising and Walmart Connect, along with our longstanding work with advertising partners such as Google, Facebook, and Microsoft.  To succeed on these networks, contact us. We can help!

Why Advertisers Should Never Bet Against Facebook

Why Advertisers Should Never Bet Against Facebook

Facebook

Facebook has done it again. On April 28, the company announced quarterly earnings that crushed Wall Street’s expectations, demonstrating a remarkable resilience. Facebook continues to ascend as a premier advertising platform, too, second only to Google in terms of online ad marketshare. Let’s take a closer look.

What Facebook Announced

Facebook’s quarterly results were impressive by any measure:

  • Earnings: $3.30 per share vs. $2.37 per share forecast.
  • Revenue: $26.17 billion vs. $23.67 billion expected.
  • Daily active users (DAUs): 1.88 billion vs. 1.89 billion forecast by FactSet.
  • Monthly active users (MAUs): 2.85 billion vs. 2.86 billion forecast by FactSet.
  • Average revenue per user (ARPU): $9.27 vs. $8.40 forecast by FactSet.

The increase in active users is key. Demonstrating that it can continue to grow its user base helps Facebook attract more advertisers.

Why Facebook Is Succeeding

Why is Facebook continuing to grow quarter after quarter even amid controversies and threats from legislators and competitors? Here are some reasons:

  • Advertisers remain loyal to Facebook. Facebook said its impressive revenue growth came from a 12 percent increase in the number of ads delivered – and a 30 percent year-over-year increase in average price per ad. Even as businesses were being rocked by the pandemic and faced an uncertain year, they were willing to pay more for ads on Facebook. And why not? Social media platforms such as Facebook enjoyed tremendous growth in 2020 as the pandemic drove more people online. Advertisers wisely went where their audience was.
  • Facebook is monetizing its user base beyond ad targeting. This is important. By its own admission, Facebook’s ability to deliver targeted ads is being threatened by Apple’s app tracking transparency privacy initiative in which users of iPhones will now need to agree to allow a business to collect information about them – known as an opt-in policy. The world’s largest social network is upset because its advertisers will have a harder time tracking its users off Facebook and serve up personalized ads to them. But Facebook has been steadily finding different ways to monetize its app (and Instagram’s) beyond ad targeting. For instance, in its earnings announcement, Facebook CEO Mark Zuckerberg discussed how the company continues to build social commerce features. And Facebook’s Marketplace service, where users can buy and sell goods, continues to grow. These features keep businesses and people engaged on Facebook, generate more ad revenue for Facebook, and give Facebook a stockpile of first-party search and purchase data to deliver more personalized experiences.

Going forward, Facebook will continue to monetize that user base in creative ways – an example being the launch of several audio features that will generate revenue for creators and inevitably create a more engaged user base – which generates more advertising revenue.

 What Advertisers Should Do about Facebook

  • Continue to capitalize on tools to help you connect with your audience on Facebook. For instance, as Mark Zuckerberg mentioned to investors on April 28, Facebook launched Shops in 2020 to help businesses more easily conduct online commerce, and there are now more than 1 million monthly active Shops and over 250 million monthly Shops visitors.
  • As always, balance your advertising among the major platforms that continue to deliver value, including Amazon Advertising, Facebook, Instagram, Google, and Microsoft Advertising.
  • Monitor expected privacy legislation and the impact of Apple’s ATT initiative, but don’t overreact. Facebook continues to show a remarkable aptitude for managing threats from competitors and legislators.

Whatever you do, don’t count out Facebook regardless of what you read and hear about the headwinds the company faces. Facebook is not going away. It’s the world’s largest social media network for a reason. Follow your audience and engage with them.

Contact True Interactive

At True Interactive, we help businesses capitalize on social media advertising to build their brands. We can help you, too. Contact us to learn more.

 

Why Amazon and Facebook Are Catching up to Google

Why Amazon and Facebook Are Catching up to Google

Advertising Amazon Facebook Google

The race to lead the online advertising market is getting tighter. According to a new report from eMarketer, Amazon Advertising and Facebook are catching up to Google’s share of the online advertising market. Let’s take a closer look.

What eMarketer Reported

eMarketer says that in 2020:

  • Amazon’s share of the online advertising market increased from 7.8 percent in 2019 to 10 percent in 2020.
  • Facebook’s share increased from 23.6 percent to 25.2 percent.
  • Google’s leading share dropped from 31.6 percent to 28.9 percent.

To put this data in perspective, eMarketer says Google’s share of online advertising was 38.6 percent in 2017.

What Does the Marketer Data Mean?

  • Amazon Advertising is only going to get bigger. That’s because Amazon delivers advertisers insight on its vast customer base – and not just casual searchers, but people searching with intent and making purchases. Per eMarketer, Amazon is enjoying growth across the board — search revenues from Sponsored Products and Sponsored Brands, and video ad revenues on properties including Amazon Fire TV, Twitch, and IMDb TV. It’s worth noting that Amazon’s growth is coming not just from ads on Amazon.com but from the Amazon network, as noted (e.g., Twitch and IMDb). That means Amazon is figuring how to use data about its customer base to expand its ad services across the web. In addition, as we noted on our blog recently, Google’s crackdown on third-party cookies is favorable to companies such as Amazon that know how to sell ads based on their massive inventories of first-party cookie data.
  • Facebook and Google are doing just fine. Despite Google’s drop in market share, the company generated a whopping $147 billion in ad revenue in 2020. Google saw a dip in its ad revenue in 2020 because its travel advertisers were hit hard by COVID-19, but the company came roaring back in the back half of the year. Google’s ad revenue actually increased by 9 percent year over year. The decrease in Google’s market share may actually help the company combat multiple anti-trust lawsuits at the state and federal level. Meanwhile, Facebook continues to reap the benefits of being the world’s largest and dominant social media network. Despite numerous controversies, Facebook enjoyed advertising growth in 2020. An increase in its user base has played an important role. That growth spiked owing to the massive uptake of social media that occurred during COVID-19, but Facebook’s user base has been climbing for years. Simply put: there is a disconnect between news media criticisms of Facebook and the behavior of its user base.

What Advertisers Should Do

  • First, follow your audience. Make your advertising investments based on the journey your own customers are making. Most customers rely on multiple digital touchpoints on their way from awareness to purchase. It’s likely that no single ad platform will (or should) dominate your spend. Incorporating Amazon, Facebook, and Google into your ad spend is probably not going to be an either/or choice (more about that on our blog).
  • Do your homework. The ad giants are going to launch more ad tools as the market place becomes more competitive. Amazon recently launched Amazon Live, which makes it possible for retailers to use livestreams to sell products – part of the live commerce trend we blogged about recently. In addition, up-and-comers such as Walmart Connect and Macy’s will launch more ad products as they capitalize on their own first-party data to generate more ad revenue.

Contact True Interactive

At True Interactive, we’ve been helping businesses succeed through online advertising for many years. Our services span Google, Facebook, Amazon Advertising, and much more. Contact us to learn how we can help you.