Once it became a true national retail presence in the late 1990s, Walmart had a big advantage over regional competitors: It could buy national TV, and they couldn't.
Now Walmart is giving up some of that edge as it plows a growing portion of its TV budget into spot, rolling out price-comparison ads against local retailers in 60 markets this year, up from 50 last year. It's part of a plan that will see Walmart produce an eye-popping 1,500 TV ads in 2013. That's more than double the 615-plus it ran in all of 2012, which itself was up substantially from a year earlier, when new local ads up 79%, according to Advertising Benchmark Index, which tracks consumer response to most new ads in the U.S.
It's all part of Walmart's effort to apply the real-time marketing popular in social media to TV, said people familiar with the campaign, though that does come at considerable cost in terms of production and spot media buys.
"We're still running a number of national ads and still feel that's playing an important role," a Walmart representative said. "But we also know grocery is a local business, and it's important to have that local voice out there."
The price comparisons already have raised hackles of competitors, who started complaining to state attorneys general last year but have so far not prompted any formal investigations, another Walmart spokesman said.
And it comes as independent analyses reach varying conclusions on how much better Walmart's prices really are vs. the competition. A study on 70 items in January and February by Consumer Edge Research found Walmart beat Kroger and Safeway most of the time on prices, though Kroger beat Walmart on beverages and Safeway tied Walmart on dairy.
While Safeway's prices were 19% higher than Walmart's overall, Dollar General actually beat Walmart in the study, while Family Dollar, Kroger and Target were all within 2% to 3% of Walmart's prices. Target beat Walmart for people using its RedCard and getting 5% savings.
A Kantar Retail survey found Walmart prices to be on average 4% lower than Target's in January, with edible grocery 14% lower than Target nationally. That was Walmart's best performance on those metrics since the survey began in 2009 -- though RedCard users still would have spent slightly less on the items than at Walmart.
The thrust of Walmart's local TV ads is comparing the cash-register receipts of consumers who shopped at a competitor to what they would have paid at Walmart (rather than looking at some artificially concocted market basket). And according to Advertising Benchmark Index consumer panels, the ads work. Walmart's local price-comparison ads average around 130 on the index, which factors in such things as likability and purchase intent, or around 30% above average for industry ads.
The sheer logistics of producing so many ads is daunting, though. Walmart is using a combination of in-house resources and outside agencies to shoulder the burden, the spokeswoman said. Walmart's primary creative agency, the Martin Agency, Richmond, Va., is doing some of the work, she said, but other agencies she declined to specify are pitching in. Andy Johnson, Walmart's senior director-advertising and production, plans to talk about how Walmart does "better, faster, cheaper production" at the Association of National Advertisers Financial Management Conference in Scottsdale, Ariz., next month.
The price-focused ads probably help with some Walmart shoppers, but surprisingly not much with the most price-focused ones, said Consumer Edge analyst Stacie Rabinowitz. Her company's monthly tracking survey of more than 2,000 U.S. consumers found Walmart's most price-sensitive shoppers, who also tend to be lower income, are the most likely to shop around at dollar stores and a variety of other retailers as they cherry-pick the best deals at each.