Strategies for Walmart's Expansion in Ad Revenue Through Diverse Brand Partnerships

Walmart Connect Expands Reach to Marketplace Sellers and Non-Endemic Brands

Walmart Connect, the advertising division for Walmart in the U.S., is reaching out to marketplace sellers and non-endemic brands to expand its business in 2024. Senior Vice President and General Manager Rich Lehrfeld shared this update in a recent blog post.

Sellers on Walmart's marketplace and smaller brands partnering with the company can now utilize on-site display advertising via the self-service ad platform, which has become the fastest-growing category for Walmart Connect. Sponsored search spending increased by 63% last year.

In addition, Walmart Connect is expanding its offerings to non-endemic advertisers such as automotive, entertainment, financial services, quick-service restaurants, and travel companies by providing offsite media opportunities.

Article Insight:

Walmart Connect aims to grow its advertiser base after a successful year. The unit is increasing the range of programmatic ad products offered to marketplace brands through its self-service platform. Additionally, they are reaching out to attract more non-endemic and international brands.

Self-service advertising is a great tool for retail media networks to expand their reach, attracting more small and medium-sized advertisers who may find managed services too expensive. By allowing marketplace sellers to display their products on-site, Walmart Connect aims to capitalize on the success of search, which has been the fastest-growing category for the company. This shift also highlights the growing importance of programmatic advertising in the retail sector. According to Lehrfeld, display ads on Walmart properties are increasingly moving towards a programmatic and auction-based model.

There has been some concern about the programmatic practices of retail media networks, particularly regarding the heavy use of ads on low-value clickbait sites known as Made for Advertising (MFA). A report from Adalytics highlighted the prevalence of MFAs in the sector, but it was noted that Walmart Connect does not engage in transactions with these types of sites.

Retail media networks are facing new competition from non-endemic advertising as they aim to showcase their expertise in first-party data to brands outside their own platforms. Walmart Connect is introducing localized self-service tools and educational resources to assist international brands in reaching U.S. customers.

To enhance the appeal of its retail media network, Walmart has taken strategic steps to compete with other retailers like Target's Roundel and Amazon for advertising investments. In a significant move, the retail giant acquired Vizio for $2.3 billion in February, gaining access to the smart TV maker's advertising solutions and valuable data that many advertisers use for their media strategies.

Walmart Connect is expanding its in-store demo stations and sampling as part of a renewed focus on using physical retail to support advertising efforts. They are also introducing in-store campaign management tools for self-service, starting with TV wall advertising.

In the digital realm, Walmart Connect is broadening media partnerships with Roku and TikTok to make them more accessible to a larger group of advertisers. To enhance targeting, conversion, and measurement capabilities, they are working on deepening their bench. They are also focusing on in-store attribution for search campaigns and brand-term targeting in search to enhance their sophistication in these areas.

Walmart Connect is focusing on improving its creative tools to support marketers in their omnichannel strategies. They are introducing new self-service features, such as video options, and a Creative Builder platform that uses machine learning to assist brands in creating and enhancing advertising assets.

In Q4, Walmart Connect experienced a 22% increase in revenue, which includes the busy holiday sales season. The division's full-year revenue grew by 30%, contributing to Walmart's global ad business reaching $3.4 billion.

Editor's P/S:

Walmart Connect's expansion strategy highlights the growing significance of retail media networks and programmatic advertising in the digital advertising landscape. The company's focus on attracting marketplace sellers and non-endemic brands demonstrates the potential for retail media networks to extend their reach beyond traditional retail categories. The self-service platform and localized self-service tools cater to smaller brands and international advertisers, enabling them to leverage Walmart's vast consumer base and first-party data capabilities.

Walmart Connect's strategic initiatives, including the acquisition of Vizio and partnerships with Roku and TikTok, reflect the increasing competition in the retail media space. By enhancing its in-store demo stations, expanding its media partnerships, and investing in advanced targeting and measurement capabilities, Walmart Connect aims to differentiate itself and provide comprehensive advertising solutions for brands seeking to connect with consumers across multiple channels. The company's strong revenue growth in Q4 and throughout 2023 underscores the success of its expansion efforts and the growing demand for retail media advertising.