When Walmart recently announced that it was joining Microsoft in a bid for TikTok, the news had many people scratching their heads. But the bid makes perfect sense in context of Walmart’s growing online advertising business, an aspect of the Walmart empire that is beginning to catch more attention among brands. Read on to learn more.
The Growth of Walmart Advertising
You might not know it, but Walmart operates its own digital advertising business under Walmart Media Group. Under CEO Doug McMillon, Walmart Media Group has been building an advertising business to compete with Amazon, Google, and Facebook (the Big Three of online advertising). As reported in The Wall Street Journal, “deep-pocketed companies with large amounts of data on their customers are in the best position to mount a challenge” to these competitors.
Walmart feels ready to play in that sandbox. The retail behemoth aims to tap into its own trove of shopper data (about purchases made both online and in brick-and-mortar stores), and sell advertising services to businesses with products in Walmart stores and across the entire digital world, on sites including Walmart.com. As Steve Bratspies, the chief merchandising officer for Walmart U.S., has noted, data can give advertisers a leg up by providing insight into what a consumer might really want and need.
For example, as noted in The Wall Street Journal, a customer might buy a bicycle in a Walmart store, then subsequently see ads for bike helmets on platforms like Facebook. The ads would direct the shopper back to Walmart.com to make the purchase. It’s a win/win, with consumer needs being anticipated and met, and brands making the connection to a motivated shopper.
Walmart’s Advertising Services
How does Walmart propose to make those connections? The retailer currently offers advertisers services such as:
- Sponsored Products ads, which consumers encounter when they are browsing Walmart.com. These ads can take many forms:
- A brand’s products can get premium placement on the first page of a shopper’s search results.
- An advertiser’s logo might appear, along with a custom headline, at the top of relevant search results.
- Products can appear as part of a product carousel of relevant alternate purchase options.
- Items can be highlighted in a “Buy Box” as the most relevant alternate purchase option on a product detail page.
- Visually compelling display ads, which keep a brand in the forefront:
- Across Walmart’s digital properties. Content and advertising can be seamlessly merged on Walmart.com, pickup and delivery, and Walmart apps.
- Offsite, across the web and social channels like Facebook, Instagram, and Pinterest. As noted earlier, relevant ads will re-engage customers and send them back to Walmart for products.
Where Does TikTok Fit into All This?
Walmart’s motivation for acquiring TikTok probably has much to do with digital ad dollars. As Mark Sullivan of Fast Company points out, TikTok is a prime space for digital advertising. And Walmart clearly recognizes that, sharing in a statement that TikTok might represent “an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses.”
TikTok is itself in the early stages of selling ads on its app, and it has data on people’s video content choices, but it lacks data on the things people buy. If Walmart owned TikTok it could use its ecommerce user data to help advertisers put ads in front of the right TikTok users. And Walmart could be the exclusive seller of targeted ad space on TikTok.
One advertising industry insider told me that a brand—say a car company—might use a cookie to capture data on a consumer that came to its site to look at cars, then use Walmart’s ad-tech to show an ad to that same consumer on TikTok.
If Walmart had an ownership stake in TikTok, Walmart could connect its advertisers with TikTok’s young demographic, too. And let’s face it — TikTok is hot. In early August 2020, the video-sharing social networking service reported about 100 million monthly active U.S. users, a figure that is up nearly 800 percent from January 2018. Walmart clearly sees the opportunities inherent in connecting its brands with that audience.