Walmart Is Quietly Growing Its Online Advertising Business

By April 30, 2018Walmart
Walmart Is Quietly Growing Its Online Advertising Business

When most people think of mega-retailers in today’s digital age, their first thoughts probably turn toward Amazon. It is quickly becoming a powerhouse in the industry, and it is looking to make some moves in the brick and mortar department. However, there is a company that already has a huge presence in brick and mortar stores and is making big strides in the online realm: Walmart. The company is realizing more people want to buy things online, and as such, Walmart is optimizing its website to account for this. However, Walmart is also growing in terms of hosting ads.

Walmart Already Has Access to a Ton of Data

As of this writing, Walmart is still falling behind Amazon in terms of online advertising and revenue. However, the company already has a huge leg-up in terms of the amount of data it has collected on data about customers from its physical locations. It is no secret stores collect data on customers to better serve them. This can include Walmart pharmacies collecting personal data on consumers to make future visits go by more quickly and efficiently.

To account for all this information, Walmart needed to build an informational hub located in Arkansas to store everything. Walmart has stated it currently stores over 460 terabytes of information on its mainframes, so there is a lot to go through.

In addition to helping customers, this data also allows stores to better understand how to operate. For example, by having information related to how busy a particular store gets during different hours of the day. This allows managers to know what hours a certain Walmart location should keep and how many cashiers are needed at certain times of the day.

Different Online Ads Walmart Uses

With all this in-store data, Walmart can better create online advertisements. There are several Walmart has used to great effect, including display media. This encompasses many different items, including video, flash, images, and text. The goal of these ads is to deliver a general ad to visitors on the site to encourage a specific purchase.

There are also native ads. This is a type of paid media that follows the functionality of the site it is on. There are a variety of reasons why native ads work. For starters, more people typically see them. Studies found that online users were approximately 25 percent more likely to look at a native ad as opposed to other types of advertising.

Finally, programmatic marketing is used when sellers want to direct a specific ad to a particular audience. One advantage of this process is that it is done in real time, so the owner of the ad can continue customizing the banner until it is ideal. It is expected spending on these types of ads will increase by 28 percent between 2017 and 2018.

Ways Walmart Is Presently Falling Behind Amazon

On the battleground of online retailers, there are two big names to pay attention to Walmart and Amazon. It goes without saying Walmart dominates the physical realm, but it has some catching up to do as far as online advertising is concerned. One way in which Amazon is ahead of Walmart is that Amazon is capable of identifying customers’ intent. As an example, take a consumer who searches for a new pair of pants online. If searching for pants on Walmart’s website, Walmart would be unable to identify the fact this person wants clothing and save that information for future use in the event there is ultimately no purchase. However, if the customer searched for pants on Amazon but did not buy anything at first, Amazon would save that information and show similar products when the consumer revisits the website.

Methods Walmart Plans on Expanding in the Future

While Walmart is falling behind Amazon, it has some substantial online services it plans on expanding in the near future. First, there is Walmart Pay. The goal with this is to make customers’ physical experience in Walmart stores even better. Walmart also plans on offering a subscription service in the same vein as Amazon Prime. This service will provide customers with faster delivery, and to ensure this, Walmart is investing in massive warehouses to house products.

Walmart is also looking to expand its grocery section. While many Walmart locations already have a grocery store in the building, it seems as though Walmart wants to be able to deliver food to customers’ doorsteps, similar to what Amazon is already doing. Finally, Walmart aims to expand its online offerings. Right now, Walmart has over 15 million items for sale online. Meanwhile, Amazon has over 160 million items available for purchase online. However, the reality of the situation is that Walmart does not need that many. It simply needs to remain competitive so that it can take in more online ad revenue.

Selling Through Walmart

Walmart is also encouraging sellers to set up a system on their sites. Merchants can sign up through Walmart’s marketplace. Applying is made simple, and there are no monthly fees to worry about. The company has a wide breadth of tools available to make it easier for customers to increase sales. Sellers can add more items as they become available, and fulfill orders on their own. The merchants keep most of the profits with Walmart taking a small, reasonable referral fee. It has become an ideal way for sellers to reach more customers and get more eyes on their products.

Walmart Improving Its Image

Another component of being successful in the digital age is to have good word of mouth. Even for massive organizations, such as Walmart, they need good reputations in their communities even if they are primarily known for their low prices. For starters, Walmart has begun to pay its employees better. Walmart seems to be adopting the business model that employees who are happy and well-compensated do better work, which results in the customers having better experiences. An increase in wages also looks good from an image perspective.

Area Where Most Big Retailers Struggle

Building a sizable presence in the online ad world is tough not only for Walmart but other big retailers. Part of this comes down to businesses wanting to specifically target a specific demographic they cannot receive when the net is spread so wide. As an example, a business that sells tech gear may prefer advertising on a tech blog with a modest but sizable audience. The reason here is that people who visit the blog are more likely to make a purchase because they have displayed a keen interest in the products already. Advertising on Walmart’s site or Target’s may not result in the same sale.

Walmart’s Entire Ecommerce Business Is Growing

Despite setbacks and challenges, Walmart continues to see steady growth in its overall ecommerce industry. A big part of this success comes down to Walmart’s head of ecommerce, Marc Lore. He is a former CEO who used to work for Jet.com, which was acquired by Walmart. In addition to acquiring Jet.com, Walmart also brought in other popular commerce startups, including ModCloth, ShoeBuy, Moosejaw, and Bonobos.

Lore described running Walmart as a small start-up. While it may sound odd coming from a company that has over 4,000 locations throughout the United States, its online presence is still relatively new, and the company needs to adapt to a changing marketplace.

With Lore’s expertise, it is no wonder to see Walmart making moves in the online industry while other retailers are struggling. Target is a similar company to Walmart that has needed to move other into the online realm to make up for a drop in physical sales. Target and Macy’s saw drops in online traffic in the first quarter of 2017. It is unlikely a giant like Target will go away any time soon, but these types of organizations need to start adapting to remain viable 10, 20 and 30 years from now.

Walmart’s Secret Weapon in All This

As mentioned earlier, Walmart has a secret weapon to keep it afloat, and that is its massive catalog of customer data. Part of the reason Walmart has been able to step up its online efforts faster than similar retailers can be attributed to this mass quantity of data. Walmart has only just started to merge this data with online advertising solutions, which is why it is arguably the most attractive options for sellers looking to advertise on Walmart’s site. This merging is only going to continue being more important as the years go on.

Walmart may not sell as many items online as Amazon, but it is still a powerful force. In terms of online ad revenue, Amazon is not Walmart’s only competitor. It also has to contend with Google and Facebook. All these companies are vying for dominance, and the online realm is still new enough to where any of them could overtake one of the others. It is an intriguing prospect to examine, and anyone interested should definitely follow Walmart’s developments.

Not Selling and Marketing Your Products Successfully on Walmart.com?

Walmart is still evolving, and that can make it difficult to identify the best opportunities and how to take advantage for your online business. Like most ecommerce channels, advertising is one of those areas that merchants should absolutely be participating.

If you are new to Walmart, and have never dealt with optimizing and marketing your products, then it’s time to learn more about OperationROI and how we help our clients increase sales on Walmart. Contact us at 1-888-277-5429, or by filling out our contact form.

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