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Walmart to make first direct pitch to big corporate ad buyers at New York event

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Reuters API
Published
today May 22, 2019
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Walmart Inc will meet large consumer goods companies and advertising firms for the first time in New York next week to pitch its advertising business, as the world's largest retailer aims to rev up its website and stores as a platform for other companies to reach customers.


The event, called "5260," is named after a Walmart store near the retailer's hometown of Bentonville, Arkansas, which is known for being a test lab for retail innovation - Reuters


The event marks Walmart's first effort to grow its nascent advertising business and heralds the retailer's rising challenge to online ad leaders Alphabet Inc's Google, Facebook Inc and Amazon.com Inc.

The event, called "5260," is named after a Walmart store near the retailer's hometown of Bentonville, Arkansas, which is known for being a test lab for retail innovation, Walmart told Reuters.

It is likely to be attended by hundreds of companies ranging from Procter & Gamble, Unilever and Coca Cola to Mattel, Glaxosmithkline and NBC Universal, multiple sources familiar with the matter told Reuters. The country's top marketing and advertising firms are also likely to be in attendance, the sources, who did not wish to be named, added.

Walmart declined to name the attendees.

Walmart's pitch will be simple: encourage some of the biggest advertisers to shift their spending to Walmart and away from rivals like Google, Facebook Inc and Amazon. And Walmart says that its massive customer base and data on what shoppers purchase give it a compelling edge.

As consumer behaviour has shifted, a growing number of shoppers now begin their product searches on Amazon instead of Google, forcing companies to move their ad budgets to Amazon - a significant change that bodes well for Walmart.

Walmart heralded its ambitions at its shareholder meeting last year when Chief Executive Doug McMillon said, "We have a tiny ad business. ... It could be bigger."
Since then, Walmart has bought its website advertising in-house, consolidated ad sales for its stores and website under the Walmart Media Group and acquired a startup called Polymorph Labs to boost the business.

The move could help Walmart shore up sales and margins at a time when revenue is likely to come under stress from tariffs on Chinese imports, and margins are under pressure from its billions of dollars in e-commerce investments.

Stefanie Jay, vice president and general manager of Walmart Media Group, told Reuters the company's "core differentiator" is that its ad offerings are informed not just by online purchase behaviour and intent but also by data on what people are buying in stores before and after they see an ad, something its online rivals are unable to see.

Eighty-seven percent of shopping in the United States still happens in stores, she said.

Over 300 million customers visit Walmart's stores every month, and over 300 million shopped with Walmart online as recently as January, drawing in more shoppers than Amazon, Google and Facebook, according to research firms.

"Advertisers are always looking for that complete picture to better understand where they should spend their ad dollars," Jay said. Walmart's ad offerings will include sponsored search and display ads, which drive awareness and engagement. Jay said Walmart will add video ads this year.

Along with Jay, other senior Walmart executives attending the event include Steve Bratspies, chief merchandising officer; Janey Whiteside, chief customer officer; and Charles Redfield, executive vice president of food for Walmart U.S.

The opportunity for Walmart will be capitalizing on the share Google is losing, consultants said. Although spending on Google search ads continues to grow and is expected to be up 17% this year to $40 billion (31 billion pounds), Google’s market share is expected to slip to 71% by 2020 as Amazon grows, according to research firm Marketer.

Even so, Walmart faces an uphill task.

Beyond search ads, Amazon offers display ads, TV-like ads in live sports telecasts and targeted ads to people as they travel around the web. 

Amazon's global digital ad revenue is expected to rise by more than 52% in 2019 to reach $14.03 billion, according to eMarketer. Pivotal Research estimates it will reach $38 billion by 2023.

In the United States, Amazon is the third-largest digital ad publisher behind Google and Facebook, which combined control about 60% of U.S. online ad spending. Amazon’s share is 5.5 percent.

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