Marketing BS Briefing: Walmart Advertising

The "other" future marketing channel

Adexchanger reports that Walmart’s revenue from selling advertising grew 30% to $2.7B in 2022, and shows no signs of slowing down. Last week I mentioned how ad-supported streaming looks like it will be the future of advertising. Well, retailer advertising is likely to be the OTHER future of advertising.

Effective targeting of ads is best done with user purchase data. If you know what someone has purchased in the past you will be much better at predicting what they will purchase in the future. Far better than knowing about their interests or hobbies. Facebook’s lookalike audiences were terrible when based on interests, but became uncanny when they layered in purchase data.

The second thing media companies selling advertising need is eyeballs.

Retailers have both of these things.

Amazon is now the third largest digital advertiser. Large retailers, who tend to have very small margins, have realized that they have been leaving money on the table by not doing this. Meanwhile manufacturers who sell through the retailers are ready to spend if they can show that an additional dollar in advertising leads to more than an additional dollar in gross profit.

In the 1990s we had this type of spend as well. We called it “retail business development”. Mostly those dollars were wasted, and mostly just a tool for getting retailers to do the things CPG firms really cared about (like proper shelving). But just as digital killed newspaper classifieds, and replaced it with something far more effective, “customer development funds” are going to fully disappear and be replaced with programatic retailer search ads.

Keep it simple,

Edward