The Supply Side: Walmart plans to grow advertising profit center

Walmart has been ramping up efforts to cash in advertising revenue from its massive supplier base that does business at Walmart.com and in stores.

Amazon has used the strategy for several years, but Walmart worked first to grow the number of sellers — first- and third-party — and has just started to focus on advertising as a profit center in the past several months.

Walmart said the timing is right to delve into the advertising realm because it believes it can provide value to suppliers with increased sales and reduce costs.

The Bentonville-based retailer took control of its advertising business in the past year, moving it from Triad to in-house, and it began bolstering its internal sales team. Fast-forward to early 2020, and Walmart began offering a self-service ad platform on top of its managed service offerings. Walmart Advertising Partners is the retail giant’s advertising arm, offering new self-service tools for search ads on its website and mobile app.

Stephanie Prasad, a senior market manager with Walmart Media Group, took part in a recent webinar with market research firm Edge by Ascential to explain the list of services available to suppliers wanting to grow online sales through advertising with Walmart.

Prasad said Walmart offers suppliers that advertise access to its “truly massive scale.” She said Walmart’s 4,759 U.S. stores are vast real estate. Combined with 160 million weekly visitors who shop in stores and online, Prasad said 95% of the U.S. population has shopped at Walmart or Walmart.com in the past year.

She said Walmart’s shopper demographic also mirrors the U.S. concerning age, income, children ages, household size and ethnicity. Prasad also said consumers are coming to Walmart.com to discover new products with 16 million searches per minute, 717 page views per second and 12 million visits each day.

“Walmart.com has become a daily destination for searching and browsing,” she added.

ClickZ reported that last year consumers spend 55% of their purchase journey in the initial research stage. Prasad said brands need to inspire shoppers to move to a sale.

Prasad said part of what sets Walmart Advertising Partners apart is the retailer’s ability to deliver ads to customers at all touchpoints. That includes in-store via online grocery pickup video ads and through social media platforms, where suppliers can extend their reach and influence across Facebook, Instagram and Pinterest.

She said Walmart.com has a broad daily reach and new seasonal customers on mobile and desktop devices. Online grocery includes habitual, repeat customers with high conversion rates and basket values. She said Walmart’s closed-loop advertising also includes offsite spots that can remind and re-engage existing customers. Prasad said Walmart is the only retailer that does all of that at scale.

“We know what our customers buy daily, and Walmart.com has become one of the largest search engines for consumers browsing for inspiration. Like trying to decide how to redecorate a living room as well as for the task-mindset shoppers who are looking to replenish everyday items and essentials like grocery, pet items and consumer packaged goods,” Prasad said.

She added Walmart.com customers are of the “research mindset” when exploring products, prices and comparison shopping for a wide variety of items.

“Shoppers spend the majority of their time online in the research mindset, so make sure your products get maximum visibility,” Prasad told suppliers taking part in the webinar.

She said sponsored ad products are a way to get items noticed on Walmart.com. These ads appear at the top of the search results and on product pages. Prasad said these ads are targeted at increasing sales for products among the customers searching for like-items, then advance them to that supplier’s product page. She said this is a way suppliers can control costs because they only pay when customers click on the ads. She said contracts operate on a first-price bid basis, which is what the supplier pays.

Prasad said there are eligibility requirements for suppliers seeking sponsored product ads. She said only the most relevant product with the highest bid wins the sponsored ad placement, and products must be in stock and rank first in the buy box.

She said for search in-grid placement, products must also appear within the top 128 organic search results, rank higher than or equal to their organic search ranking, be of the same category as the search query and be the same product as at least one non-sponsored product in the top 20 results.

In-grid placement refers to the 12 buy-blocks or grids that appear on a typical search query. Walmart said it would control the number of sponsor ads that appear in-grid placements and will never fill more than two of the four available slots at any given time. Each of the grids or buy boxes feature the product, price and delivery options with a link for purchase.

Walmart also offers suppliers the ability to purchase carousel placement ads. These ad boxes appear below the search results on category and product pages, and there is a maximum of 24 sponsored products per carousel. Prasad said carousel products do not require suppliers to be in the top 128 search results.

Prasad said carousel ads are a great way to increase visibility and drive more traffic to supplier site pages. She warns, however, that supplier pages must have relevant content for consumer consumption, such as product reviews, photos and video, or consumers are likely to bounce to another page.

Walmart has partnered with digital ad platforms Flywheel Digital, Kenshoo, Pacvue and Teikametrics to build a new media ecosystem to grow search offerings that meet the needs of advertisers.

In January, Lex Josephs, vice president of sales and media partnerships at Walmart Media Group, said the retailer had completed the legwork to be able to deliver suppliers better values in fully-sponsored ad campaigns.

“We also brought on new talent across executive and engineering levels and achieved tremendous success with campaigns for brand partners like Kellogg’s and Hershey’s. We have something unique to offer brands, the ability to maximize campaigns with rich data insights — based on both in-store and online data — at scale,” Josephs said.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.