Walmart Exchange Seems Like Natural Next Step

Last week Walmart announced its own media buying exchange was in beta phase. The Walmart Exchange (WMX) shows the world’s largest retailer tightening its grip on its digital assets, developing a platform for targeting audiences and buying media for itself and the hundreds of companies supplying its stores.

While we haven’t seen exactly what form WMX will take or what it will effectively manage without help from outside tech vendors, taking such an important piece of digital strategy in-house is a good look for Walmart. This kind of a data play should be valuable to all involved, including publishers. Ultimately, WMX is a sensible development that takes advantage of existing programmatic infrastructure and advances it to the service of its partners at scale. Despite the hyperbole suggesting it’s an industry game changer, it is simply the natural evolution of an in-house marketing strategy for the world’s largest retailer.

WMX shows a brand using programmatic not only as an advertiser, but as a data player. Walmart is sitting on huge amounts of consumer data, which the company will be able to ply for correlations between ad exposure and online and in-store sales. The scale will help draw these insights quickly, aiding targeting and optimization, and allowing Walmart to understand which audiences are likely to respond to which messages. Programmatic gives brands agility in integrating their data into more comprehensive marketing programs, which is what Walmart is doing with WMX and its overall efforts to revamp marketing strategy. Because of its exceptional footprint in the market, Walmart has the data to become an active player, and it’s in its interest to develop software to make that data serve the company and its suppliers.

Indeed, for a company like Walmart, this is a natural step forward. Some have suggested that WMX turns Walmart into a media agency, which feels misguided. WMX is a digital take on what the company has been doing for years with sales circulars and coupons. If Walmart is pushing a promotion on Tide, for example, it’s leveraging its marketing muscle over its own customer base to push Tide out its own stores. This didn’t make Walmart an agency and it doesn’t make it one now. But it does show how the retailer is smartly adjusting to the changing landscape to maintain a competitive edge.

Publishers, though, will see new benefits from WMX. It allows publishers to interact directly with marketers across Walmart’s diverse range of offerings, which range from CPGs to high-consideration products. Working with a variety of marketers in one place allows publishers to develop inventory packages that work well for both the sell and buy side, deliverable via the existing programmatic framework

Publishers need to think about how they can tap into programs like this, aligning their engaged audiences with large retailers that want to reach those audiences — whether that be via WMX, a private marketplace, high-impact ad placements, or cross-channel efforts utilizing marketers’ own data sets. And publishers need to be proactive in working with advertisers to develop programs that have more value than just ad space. In Walmart’s case, the company has the scale to analyze in-store purchase data to understand how and when those ad placements work best.

Before brand marketers start hatching plans to launch their own trading desks, we need to remember why WMX is good for Walmart  -- that’s Walmart’s size. Very few companies are in a position to do the same and expect meaningful results. But regardless, it will be worthwhile for everyone to watch how WMX plays out, as one more way in which programmatic can be leveraged for a company’s unique needs.

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2 comments about "Walmart Exchange Seems Like Natural Next Step ".
  1. Hollis Thomases from Hollis Thomases , July 18, 2014 at 4:51 p.m.
    I do think media buying agencies need to be worried about WMX. Several years ago, I was involved in a media pitch for a brand name company whose revenues heavily relied on Walmart. My company would have been responsible for buying and managing the paid search component of the campaign. Pretty far into the proposal process, the prospect came back to us with a counter-proposal they had been handed by Walmart in which they offered to run the paid search campaign. Included in their promised deliverables was data on how many sales dollars in revenue-by-product the paid search ads would actually deliver. Pretty convincing, powerful stuff since we wouldn't have been able to tag the Walmart site to measure any of the specific sales conversions. This is the downside of any distribution channel sale, and why some brands are now more eager to deploy commerce-enabled websites of their own. Needless to say, we didn't get the business. Translate this scenario to any of the other Walmart-dependent brands out there. Maybe agencies won't lose all their buying business for an ad client, but they're likely to lose a big chunk. And that's what Walmart is banking on.
  2. Will Doherty from Casale Media , July 21, 2014 at 10:11 a.m.
    Hollis, I do not mean to imply agencies will not feel an impact - they certainly will, as your example delineates. But this is no different than what Walmart has with suppliers that are heavily reliant on their distribution. They want to shift dollars towards marketing programs that will simultaneously support Walmart's stores and lower the cost of those goods. The fact they are doing this digitally is the evolution but this has been a feature of their success for a long time. Thanks for your comment!