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Walmart seeks ad business boost in fight with Amazon

By
Reuters
Published
today Feb 27, 2019
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Walmart Inc will consolidate advertising sales for its stores and websites, it said on Tuesday, aiming to boost profits from an untapped business as the world’s largest retailer competes with marketing titans Amazon.com Inc, Alphabet Inc’s Google and Facebook Inc. 

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Walmart’s suppliers, such as Procter & Gamble Co, Unilever Plc and Mondelez International Inc, can deal with one inhouse ad team instead of different groups within and outside the retailer, company executives said.

Walmart will inform suppliers of the change at its annual meeting with them on Tuesday.

The move comes as rival Amazon is boosting profits by letting merchants pay for high placement in its search results. Its ad sales and other revenue jumped 95 percent to $3.4 billion in the fourth quarter.

About 300 million shoppers visit Walmart’s stores every month, and millions make online purchases on its website, according to Forrester Research. The retailer draws in more shoppers than Amazon, Facebook and Google, the research firm estimates.

At Walmart’s investor conference in October, Chief Executive Doug McMillon said its ad business was “tiny” and “it could be bigger.” He said the company’s data has not been monetized.

Walmart also said this month its online losses are likely to widen this year due to investments to expand the business, and the advertising push could offset some of that.
“We have a unique opportunity to leverage our first-party shopping data from online and offline purchases to reach our customers and influence their purchase decisions,” Walmart Chief Merchandising Officer Steve Bratspies said in an interview.

The retailer is consolidating teams into a single group for ad sales and operations, Bratspies said.

“It can be as simple banner ads on the website ... to in-store capabilities on our TV network,” he said.

Walmart is bringing its digital ad business inhouse and ending its relationship with Triad, a unit of WPP, which sells advertising space on websites. Triad did not immediately respond to a request for comment.

The challenge for companies and marketers often is gauging whether their investments are yielding a return. Walmart will address that challenge by connecting data from stores and online and offering a pitch that is “much more effective than many others can,” Bratspies said.

Trade marketing, typically used by packaged goods manufacturers to target shoppers, are moving to Amazon, according to analysts. U.S. trade marketing totals an estimated $178 billion a year and makes up most of Amazon’s U.S. ad dollars, Morgan Stanley analysts estimated.

The retailer will also ask suppliers to deliver a full truckload on time at least 87 percent of the time and expects those delivering less than a truckload to be on time at least 70 percent of the time.

Walmart will ask suppliers to deliver full orders a minimum of 97.5 percent of the time, it added.

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