Walmart may be the most intriguing player in advertising
Could a Roku acquisition make sense? Could an advertiser actually crack the triopoly?
One of the things that really stood out this year at Cannes was the Amazon Port, which took over a little-noticed dock area and turned it into a pavilion featuring concerts, tai chi sessions and panels on data-driven creativity.
This form of ‘activation’ would be hard to envision just a few years ago, when Amazon ad sellers lurked in the shadows and the company still parked ad revenue in the ‘other’ bucket during earnings calls.
Now I’m wondering how far away are we from the Walmart Villa. Nothing screams French Riviera more than savings! What about the Walmart NewFront, hosted by Saweetie?
I may be getting ahead of myself, but in light of the explosion in retail media - centered on Amazon’s ascent to become a $31 billion ad company - you have to wonder, is Walmart next?
After all, the company did turn heads by pulling in $2.1 billion in ads last year, buoyed by surging eCommerce and a unique ad tech partnership with The Trade Desk.
Then just the other day, the company announced, eCommerce and ad business surged in Q2 of 2022, as the number of advertisers working with Walmart jumped 121% over last year.
“I can't remember a business with the margin structure of the advertising business here at Walmart and having 30% growth for the quarter was nice to have,” said John Furner, President and CEO, Walmart U.S. on the earnings call.
In addition, Walmart also announced a deal with Paramount to bundle Paramount+ with its Walmart+ service. That news got more attention in terms of what it means for the streaming wars, but it also has ramifications for CTV advertising - as Walmart gets to sell some Paramount+ ad space.
So just how big are Walmart’s ad ambitions?
“I mean, they mentioned it like four times on the call,” Ross told me. “Amazon has given them the playbook. They’d be stupid not to try and do something more.”
That got me thinking. What more could they do?
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It’s true that Walmart is one of seemingly dozens of companies- ranging from Kroger to Walgreens to CVS to Albertsons, that have jumped into advertising over the past couple of years. Yet for many of these companies, advertising seems like an excellent source of found money, less a strategic advantage. Walmart has more upside, in part because, while not Amazon big, it is really big. is According to comScore, Walmart with 122 million unique users in the US, landing it at number 22 between Fox and Zillow. No other retailer cracks the top 50. Plus there are those 5,335 actual stores in the real world.
Walmart is already using its customer registration and shopping data to drive up digital ad sales. The real power to be unlocked, Ross said, is if Walmart is able to combine its in-store shopping data with its eCommerce data in a way that helps advertisers tie different forms of targeting and exposure together. Amazon can’t even do that (outside of areas with a Whole Foods).
Could Walmart actually follow the Amazon playbook and improve upon it? Could the big box retailer actually squeeze its way into the digital tripoly?
Well, one obvious thing that Amazon has that Walmart doesn’t is a streaming stick like the Fire. The company is not a contender in the TV operating system wars - and it certainly doesn’t seem inclined to follow Amazon’s lead in spending billions on Lord of the Rings prequels.
But interestingly, Walmart is testing shoppable ads through a partnership with Roku. Why couldn’t the company start testing something similar as part of its Paramount+ deal?
A few years ago, Ross’s colleague, Rich Greenfield, suggested that Walmart actually buy Roku.
Lately, Roku is showing signs of struggles, and its market cap down to $10 billion, after being above $40 billion just a few years ago. Wouldn’t it be a great time for Walmart to jump in?
“Looking back they probably should have,” said Ross. “When Roku had that first mover advantage.”
Now, the streaming sector is crowded. You could argue, just how good a business is owning a streaming device, when TV companies are propping up their own interfaces and ad businesses? On the other hand, it wouldn’t seem that hard for Walmart to prop up its own version of a FAST service like Pluto inside one of its owned and operated TVs. Yet at the same time, Walmart also sells Rokus, and TCLs powered by Google, as well as lots of other TVs in its retail stores. So it’s complicated.
As mentioned, it seems to me that there are only a few companies seem capable of making shopping ads on TV a thing - Amazon and Walmart. I wonder if Walmart could simply look to provide data and power smart TV shopping carts/wallets for a bunch of other players in CTV, rather than trying to push into the market as a yet another player.
“They question for them is, how do you create video inventory?’” said Ross. “They are playing from behind.”
Perhaps the simpler path may be on the open web. Walmart could theoretically look to create a retail media rollup that would at least make Amazon pay attention. They could look to pool their data assets and create a Walmart identifier, turning the company into a far more integral player in the digital ad ecosystem.
That will all take technology, and infrastructure, and investment. “It is not a snap your fingers kind of thing,” said Ross.
Still, if you close your eyes, you can see a bunch of ad executives looking for direct flights to Bentonville, Arkansas, for the first ever Walmart Connect Summit/Rodeo, coming summer of 2023.
a little angel tells me that Walmart looked at this idea quite seriously a number of years ago, Roku much much MUCH cheaper back then. They had a device called the "spark" which was a streaming stick and it was more of a "douse" then spark in terms of sales
thank you nice read! Please explain what does this mean - "I wonder if Walmart could simply look to provide data and power smart TV shopping carts/wallets for a bunch of other players in CTV"??