Walmart Wants to Take On Amazon in Digital Advertising




  • In Business
  • 2019-04-20 15:10:00Z
  • By Danny Vena, The Motley Fool
 

The ongoing showdown between legacy retailers and digital sellers is best exemplified by the growing rivalry between Walmart (NYSE: WMT) and Amazon.com (NASDAQ: AMZN). The former is the world's largest brick-and-mortar retailer, while the latter is the world's e-commerce leader.

That's not to say either company is staying in its respective wheelhouse. Walmart has made a significant push in recent years to develop its online business, and Amazon has turned heads with its move to open an increasing number of physical locations.

It seems that at every turn, the two companies are butting heads and finding new ways to compete. Now the struggle has moved to advertising.

Image source: Getty Images.

Morphing its ad capabilities

Walmart recently acquired Polymorph Labs, a start-up focused on managing digital advertising. This comes in the wake of Walmart's decision to leverage its customer data to provide more relevant ads. In the press release to announce the acquisition, Walmart said:

This isn't the first move Walmart has made to better compete with Amazon and others in the realm of advertising.

Earlier this year, Walmart consolidated the advertising departments of its e-commerce unit and its physical stores in an effort to increase the profitability of its ad business. By combining the ad teams into one integrated unit, the company's ad suppliers can manage both online and in-store advertising with one contact. Walmart also decided to bring its online ad sales in house, in effect cutting out the middle man.

Walmart Chief Merchandising Officer Steve Bratspies detailed the company's intentions. "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," he said.

It all "ads" up

Amazon has increasingly focused on its advertising business in recent years, and those efforts are paying off. Ad revenue jumped 95% year over year in the fourth quarter to $3.4 billion, and it grew 117% in 2018, topping $10 billion. The company started with product advertising on its e-commerce website, and all of its revenue growth came from promoting products on its site, but the number of ads it can place is limited.

The e-commerce giant has recently made other moves to leverage its growing advertising business by creating entirely new destinations to sell its advertising. Early this year, Amazon debuted Freedive, a free, ad-supported streaming video service from its wholly-owned subsidiary IMDb (Internet Movie Database), which significantly expands the company's opportunity to place ads.

This may just be the beginning. Amazon is planning to launch a free, ad-supported music service, according to a report by Billboard. That service could debut as early as next week, giving Amazon an entirely new avenue for its advertising ambitions.

Historically, radio and television were the most effective ways to reach consumers en masse, but the entertainment landscape is changing, with consumers dumping traditional broadcast television and radio for their digital counterparts. By providing ad-supported streaming options in both video and music, Amazon stands to increase its advertising opportunity on a massive scale.

Image source: Getty Images.

The rivalry continues

Looking back several years, many had given up Walmart for dead, as the company was late to develop a comprehensive e-commerce strategy. Walmart has taken big risks to close the gap, including its $3.3 billion purchase of Jet.com in 2016 and a host of smaller acquisitions in the space.

Amazon's move up the ranks in online advertising is unprecedented, as the company became the third-largest digital ad platform in the U.S. late last year. Walmart isn't waiting around this time, and it's consolidating its position to better compete with the e-commerce juggernaut.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.

COMMENTS

More Related News

Searches for
Searches for 'Canceling Amazon Prime' Spike on Prime Day

(Bloomberg) -- Internet searches for "Canceling Amazon Prime" were 18 times higher on Monday -- the beginning of Amazon.com Inc.'s two-day sale -- than the previous day, according to search intelligence firm Captify. The data suggest shoppers want to snatch up discounted gadgets and appliances without

UPDATE 1-Tech executives head to Capitol Hill for antitrust hearing
UPDATE 1-Tech executives head to Capitol Hill for antitrust hearing

Executives from tech giants Apple Inc, Amazon.com Inc, Facebook Inc and Alphabet's Google go before the House Judiciary Committee's antitrust panel Tuesday to discuss competition in online markets. The committee is likely to discuss antitrust probes of the four companies under way at the Justice

Right Now It Looks as If It Is Time for CVS Stock to Breakout Higher
Right Now It Looks as If It Is Time for CVS Stock to Breakout Higher

It's been a tough run over the past few years for retail pharmacy and pharmacy benefit management (PBM) giant CVS (NYSE:CVS), and CVS stock has had trouble gaining traction. Click to Enlarge Source: Shutterstock On the retail side of things, increased competition and the threat of an Amazon (NASDAQ

Whole Foods workers say conditions deteriorated after Amazon takeover
Whole Foods workers say conditions deteriorated after Amazon takeover

Employees described increasing pressure to push Amazon Prime deals and memberships, understaffing and increased workloads'Amazon has changed the company so much to the point where I can't recognize Whole Foods anymore,' a team member in California said. Photograph: Shannon Stapleton/ReutersSince being

Lady Gaga launches makeup brand on Amazon for Prime Day but some fans aren
Lady Gaga launches makeup brand on Amazon for Prime Day but some fans aren't thrilled

Lady Gaga fans are thrilled the pop star has released a makeup line that champions the same kind of self-expression and diversity she's known for.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

  • internet marketing service
    (2019-07-04 18:50:02Z)

    I think Walmart should not go for this idea. This will only hurt them in their internet marketing service regime that they are trying out. Walmart can't compete with Amazon when it comes to online marketing, and that's it.

    REPLY
  • Testo Ultra Farmacias
    (2019-07-08 20:38:11Z)

    Ultra Max Testo Enhancer - Die natürliche Formel zur Steigerung des Testosterons

    REPLY
  • çevrimsiz yatırım bonusu
    (2019-07-13 01:12:46Z)

    Greetings! I know his is kind of off topic but I was wondering if
    you knew where I could get a captcha plugin for my comment form?
    I'm using thee sam blog platgorm as yours and I'm having problems finding one?
    Thanks a lot!

    REPLY

Top News: Business

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.