Walmart and Target are both taking bold steps into the advertising world, with aggressive pitches to both advertisers and agencies, offering ad services and platforms that rival Amazon's.
But while observers are impressed with how slick and well-packaged these new businesses seem to be, there are still many questions about how well they will do.
To be clear, in some ways these retailers have been in the ad biz for a long time. Both companies, and many other stores, have always sold ads -- from old-fashioned circulars to sophisticated digital offerings.
“Retailers have had media networks for some time,” says Sucharita Kodali, vice president and principal analyst at Forrester. “It’s not a new thing. It’s more attractive now that Amazon has shown how big that business can be, but it was always a good idea and a great way to monetize a retail property that attracts a lot of consumers.”
Big is an understatement. eMarketer forecasts Amazon will take in $11.33 billion in ad revenue this year, and $15.01 billion in 2020.
What is new, though, is how fervent Target and Walmart both seem to be about getting their share of retail ad dollars. Their presentations “have been very sophisticated events, coming from organizations that typically aren’t that sophisticated about branding” in terms of outreach to media partners, says Amy Lanzi, executive vice president and commerce lead, Publicis Media. “They were very clear talking about their vision.”
Lanzi says these pitches are inherently appealing to both advertisers and media partners. “At their core, they are retailers, and say, 'if we don’t sell more products, we are not successful.’”
Walmart Media Group, which called its New York event “5260” after one of its test stores, invited hundreds of companies, according to a report from Reuters, in its first-ever direct pitch to the ad community. It recently acquired Polymorph Labs, a startup, to help build the business.
The article quotes Stefanie Jay, vice president and general manager of Walmart Media Group, who says Walmart’s ad offerings will be shaped by online purchase behavior, but also by what customers buy in stores before and after they see an ad. That’s an approach online rivals like Amazon can’t take.
Lanzi says Jay told those at the Walmart gathering that it intends to hire some 300 people to support the new business. And, in more proof that it hopes to challenge Amazon in just about every arena, the retailer just announced it has hired Suresh Kumar as chief technology officer and chief development officer, reporting directly to President and CEO Doug McMillon. Kumar has held high-level roles at Google, Microsoft, Amazon and IBM.
Target Corp., which the Wall Street Journal says is considering buying Triad Retail Media from WPP, the media agency Walmart split with back in February, rechristened its media division Roundel earlier this month. It promises to use the chain’s rich insights “to create smart, personalized campaigns that connect our guests to information and offers they’ll find most relevant.”
Lanzi says the retail industry’s challenges, which many observers have been calling “the retail apocalypse,” is also fueling the change. “Retailers are really thinking about what digital transformation means to them.”
Both companies “are very focused on being able to partner more deeply with the brands to help them build their businesses.” How well they can collaborate with brands, rising above the basic merchant-manufacturer relationships they’ve always had, will be key to their success.
Still there are still crucial details missing from both companies’ offers. “It isn’t yet clear exactly what they're doing in terms of changing their offering,” Lanzi says. Both are talking about closed-loop attribution and tracking end-to-end sales. And if they can do that, she says, it will be a genuine game-changer.
“That’s the Holy Grail, and would make us say, 'Wow, this is worth shifting dollars, because we can really see the benefit.’”