Walmart teams up with The Trade Desk in ambitious plan to become a top 10 ad seller
Walmart has reached a deal with The Trade Desk to develop a programmatic buying platform using the retailer’s data to place ads outside Walmart properties as part of a broader plan to become a top 10 player in the U.S. ad business within five years.
Walmart is changing the name of its media business to Walmart Connect from Walmart Media Group following a year in which the retailer doubled ad revenue, says Janey Whiteside, chief consumer officer.
Whiteside declined to provide revenue numbers, but hitting the top 10 among U.S. media sellers would likely require north of $10 billion in revenue and push Walmart past the likes of Verizon Media, Discovery and Spotify. Michael Stich, general partner and CEO of services for digital shop CourtAvenue, estimates Walmart’s current media revenue in the $3 billion to $5 billion range, no small enterprise, but well below the media business of Amazon, with estimated sales around $20 billion last year.
Media has become increasingly important strategically to Walmart as its e-commerce business grows much faster than its store business. While Walmart’s e-commerce business grew 79% in its most recent quarter closed Oct. 31, the giant retailer still isn’t profitable selling online, which increases the need for a fast-growing, high-margin media business.
Walmart Connect, while heavily focused on digital, is built around linking digital with in-store media, including access to 170,000 digital screens on walls and self-checkout stands in 4,500 stores serving more than 150 million customers weekly. The in-store network allows many brand messages to be delivered with date, time and geographic specificity, Whiteside says.
Walmart Connect is also increasing opportunities for brands to be included in in-store experiences and sampling, such as the Walmart Drive-In movies showing in store parking lots this summer or the holiday drone light shows in more than 200 stores. While the pandemic has shut down most in-store sampling, Walmart has been stepping up sampling in other ways, such as with home deliveries via its Walmart+ membership program.
“Walmart is pioneering a new frontier in digital advertising, providing marketers with access to shopper data for the first time, in a way that both protects consumer privacy and improves the consumer experience,” said Jeff Green, CEO and co-founder of The Trade Desk in a statement. “In doing so, marketers will be able to create much more refined, relevant and measurable advertising campaigns, which can be adapted on the fly.”
While Walmart has operated a demand-side platform for use within its digital properties since 2015, partnering with The Trade Desk to provide a DSP for use elsewhere online is a major step, Whiteside says.
“We’re going to be taking our first-party data, which we believe is unparalleled—the physical and digital part of it—and use it to drive media performance outside of our proprietary sites,” Whiteside says.
One key to how attractive the new arrangement is to advertisers is the degree to which Walmart shares data about sales impact in its stores and e-commerce operations from ads, Stich says.
He says suppliers give Walmart high marks for rolling out self-service ad buying tools last year.
“They are increasingly viable as a standalone ad network,” Stich says. “Up until six months ago, they were seen more as a necessary cost of doing business with Walmart.”
One sticking point, though, he says is that Walmart has set a high bar—$35 million in annual media spending—for the highest levels of service and data sharing, something only the biggest players such as Procter & Gamble Co. or Unilever can afford.
Whiteside says that, while endemic business from suppliers is clearly the backbone of Walmart Connect business, she believes it offers enough value that advertisers beyond those who sell products in its stores or digital properties will do business.
While other retailers such as Kroger Co. have deep data streams from loyalty programs to offer advertisers, Walmart doesn’t have such a program. But Whiteside believes Walmart’s breadth and growing relationships with consumers through such programs as Walmart+ is generating an increasingly valuable data trove.
And while programs through supermarket loyalty programs often revolve around price promotions, Walmart media deals are more focused on brand advertising.
Moves announced today follow a series of steps Walmart has taken in recent years to consolidate and streamline its media business, including taking ad sales for its websites in house in 2019 from Triad, a unit WPP ultimately shuttered. Rich Lehrfeld, a Walmart store marketing executive, took over as interim leader of WMG last year following the departure of Stefanie Jay.
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