Retail Media Growth Forecast and Walmart’s Ascendancy
Retail media is projected to witness an approximate 20% increase by 2025, as reported by eMarketer. Advertisers are increasingly leveraging this channel to access retailers’ extensive first-party data, enabling them to engage with consumers at the critical juncture of purchase.
In this context, Walmart Connect is outpacing the broader retail media landscape, achieving an impressive 33% growth in the U.S. last quarter.
This remarkable performance eclipses the retailer’s overall sales growth by a factor of six and constitutes approximately one-third of its operational income when factoring in membership fees.
“Advertising has perhaps been the most transformed segment within our enterprise, significantly influencing our profit and loss statement,” remarked John David Rainey, Walmart’s Executive Vice President and CFO, during the Morgan Stanley Global Consumer & Retail Conference earlier this month.
“As we have garnered market share, advertisers aspire to follow the audience, and thus, our advertising arm has performed exceptionally well.”
Walmart engages around 150 million customers weekly through both its app and physical stores, boasting the capability to deliver orders on the same day to 95% of the U.S. population.
This operational efficiency serves as a distinct advantage during the holiday shopping season and beyond. Furthermore, with 4,600 locations, Walmart not only caters to conventional consumer spending but also unlocks substantial opportunities for on-site retail media.
This expansive reach, combined with investments in analytics and a burgeoning connected TV (CTV) platform, is propelling Walmart Connect towards advertising leadership.
“Walmart Connect has evolved from performance-centric media to comprehensive solutions encompassing the entire customer journey, enhancing experiences across all touchpoints,” stated Seth Dallaire, Executive Vice President and Chief Growth Officer at Walmart U.S., in a recent LinkedIn post.
“We have made significant advancements in aligning and optimising our advertising technology platforms, improving efficiency and creating new top-of-funnel opportunities for advertisers.”
Integrating Vizio: A Strategic Move
A year following the acquisition of smart TV manufacturer Vizio, Walmart is reaping the fruits of its investment, with the global ad enterprise, inclusive of Vizio, achieving over 50% growth in the last quarter.
This foray into CTV has enabled Walmart to attract a diverse array of advertisers from sectors such as automotive, financial services, and quick-service restaurants (QSR)—some becoming the largest stakeholders on the Walmart Demand-Side Platform (DSP).
“The CTV segment is the most rapidly expanding facet of Walmart Connect, with Vizio acting as a catalyst,” remarked Ryan Mayward, Senior Vice President of Sales at Walmart Connect, during an interview.
The integration with Vizio entails equipping advertisers with the capability to target Walmart customers based on their shopping histories, allowing for precise measurement of ad impacts when displayed on Vizio screens.
This encompasses both its free, advertisement-supported streaming service and other ad-supported applications.
Recently, Walmart initiated advertising on the Vizio home screen, utilising Walmart’s audience data for targeted campaigns and performance evaluation.
The company has also introduced a bundled offering merging the Vizio home screen with Walmart’s app, with future plans for concurrent advertising across multiple platforms.
Moreover, Walmart intends to embed Vizio’s operating system into its private label Onn TVs, potentially expanding Vizio’s OS presence to 25-30% of U.S. households.
“We are thrilled about Vizio since consumers exposed to CTV ads are 28% more likely to purchase Walmart products,” Mayward noted. “The more customer engagement points brands utilise, the greater their sales will be.”
Enhancing Measurement Across Platforms
Walmart is making substantial investments to implement closed-loop measurement across its advertising portfolio, which includes search, display, video, and in-app promotions, as well as off-site initiatives involving social media and CTV ads purchased via its DSP.
Over the past year, the retailer has introduced metrics to gauge incremental return on ad spend (iROAS) for search capabilities, further enriching the incremental value of display and video.
“We are cataloguing both the volume and efficiency of incremental sales, yielding favourable results,” Mayward emphasised.
“When we discuss retail media trends, iROAS is the gold standard that all ad products aspire to, and we are progressing in that direction. The importance of signals cannot be overstated, and our solutions are continuously evolving.”
The retailer now provides closed-loop measurement options with platforms like TikTok, television networks, and Meta, the latter enhancing a pre-existing collaboration to measure return on ad spend.
The company offers measurement through various channels: some are conducted via its Walmart DSP, while others involve tailored integrations, such as a recent partnership with Disney aimed at closed-loop attribution for streaming advertisements.
“Brands expect consistent metrics across every advertising channel, whether within Walmart locations or externally, and we are delivering on that expectation,” Mayward stated.
Walmart is also advancing its in-store retail media capabilities, a long-discussed extension that has yet to gain substantial traction in the U.S.
In tandem with funding the required hardware and advertising technology to facilitate in-store promotions, Walmart is focused on creating contextually relevant, customer-centric advertisements while improving metrics for brand lift and sales increases garnered from in-store displays.
“We will not promote unrelated products on screens dedicated to food items; our strategy involves delivering ads pertinent to the shopping experience,” Mayward remarked.
The Artificial Intelligence Imperative
While in-store engagements may represent the next frontier for retail media, artificial intelligence is revolutionising the entire advertising landscape.
Walmart is anticipated to unveil developments related to AI at the upcoming CES trade show in January, having already integrated AI across various components of its advertising technology stack.
AI enhances its creative suite functionality, facilitating rapid, cost-effective, and high-quality production of image and video content.
Additionally, this technology drives a programmatic solution that has democratized advertiser access to display inventory within its app, elevating bidding efficiency and optimisation in the search interface. Moreover, AI empowers brands to establish their own stores within the Walmart app in mere minutes.
Apart from advertising, Walmart is exploring AI applications through Sparky, its consumer-facing generative AI assistant, along with a partnership with OpenAI aimed at integrating shopping into ChatGPT.
While the emergence of agentic commerce stands to transform the shopping landscape and advertising expenditures on Walmart Connect, the retailer is committed to fostering innovation.
“The framework for the forthcoming phase of commerce, marketing, advertising technology, and content innovation will be authored in real-time,” Mayward concluded.
Source link: Marketingdive.com.
